|Are You Aware of the Major Changes HUD Has Implemented for Condominiums?
If you live in a community or have a condo approval company that has not adapted to these changes, there may be a problem.
Some of the Changes Include:
- Requiring “re-certification” every 2 years
- Mandatory recertification for HUD projects approved prior to October 2008
- Elimination of “spot” approvals
A big problem is that communities or a condo approval company that does not recertify will no longer be on the HUD approved list.
If you want a successful condo community it is important to be able to offer FHA financing. With today’s real estate market it can have a big impact.
Why HUD approval is important
Without HUD approval FHA financing won’t be available. Why won’t FHA financing be available? HUD made changes in January of 2010 that changed the guidelines for condominiums. FHA loans are usually more lenient than conventional loans therefore making them easier to obtain for most everyone.
If your condo community is not HUD approved then buyers that are only able to get a FHA loan won’t even consider a condo in the community. In today’s real estate market that could be devastating to the livelihood of your condo community. Less access to affordable financing could cause the market values in your community to drop.
Other loan programs have higher interest rates and are harder to get approved with. FHA loans are more affordable that most other programs out there.
FHA loans aren’t actually loans. Instead the FHA, Federal Housing Administration, insures loans. Qualified lenders can participate in this program. It originated with the intention of providing sufficient insurance to federally qualified lenders when the borrower defaults. The program has been in place since the 1930’s. For borrowers and projects that are credit-worthy but don’t meet conventional underwriting requirements. When a property meets certain minimum requirements, including condominiums, the lenders is protected against loan defaults. In addition:
- Homebuyers can put down as little as 3.5% of the purchase price
- Homebuyers can receive up to 6% of closing costs
- A blood relative can co-sign
Obviously a small down payment is a huge benefit to homebuyers that wouldn’t otherwise be able to purchase a home. This is especially helpful for first time homebuyers looking to purchase a condominium as their first home. The ability to allow a co-signer with few restrictions is especially beneficial. There isn’t a requirement for the co-signer to resign in the home with the first time homebuyer.
Home ownership is something that most people strive for. For those that have little credit or lower income this program helps make that possible.
The demographic that this FHA program targets covers a large chunk of the population. First time home buyers are the largest segment of those buying homes. On top of a low down payment requirement there is also a low threshold for credit score requirements and flexible income requirement. You want to target this key demographic. You could be missing out on a lot of opportunities if your condominium isn’t HUD approved.
Get HUD Approved Now
It is important to get approved or recertified before the expiration date. The time your community will be eligible is quickly slipping away. When your community is HUD approved, the current owners in your community and new home buyers can start taking advantage of the affordable FHA programs.
Having your approval expire could result in more hassles. Get started on your recertification today. Don’t wait until it’s too late or too busy to get approval or to recertify.
Before the changes were made, HUD allowed owners or buyers to obtain FHA financing without full blown FHA approval. This was eliminated, creating the need for every condominium community to need FHA approval.