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Profile picture for ceencee

51% OWNER OCCUPANCY

I have been trying to get a refinance on my condo for a year or so and have been totally unsuccessful at getting anyone to do the deal. My credit is great (high 700s), I have at least 20% equity, and still noone will do the deal because 60% of the units in the complex are leased while 40% are owned. I am stuck at a 6% rate on a 30year mortgage right now.

Am I doomed to wait until they sell another 11%?
  • November 29 2010 - Chesterfield
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Answers (6)

First of all, can we all admit that 6% is NOT a terrible interest rate to be paying in the first place?  Assuming you have a $200,000 mortgage, your P&I are about $1200/mo right?  At 4% that number goes down to about $950, or a $250/mo difference.  Refinancing will cost you somewhere in the neighborhood of $2-3,000, depending on lots of variables, plus the escrows, etc.  Will you be holding this property for more than 12 months?  That's the amount of time it will take you to recoup your refi costs.  If so, do you have the option from your lender to make bi-weekly payments?  That will add a $1200 reduction to your loan amount annually.  Not the $3k you would save on a refi, but it would effectively reduce your interest rate to about 5.25% without any additional out of pocket expenses, and NO refi costs.  What do you think?  My 2 cents.
  • December 08 2010
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Profile picture for Bruce Cadden
This is the major problem condo buyers and owners are going to have for the foreseeable future. If the complex is not approved by FHA, Freddie Mac and Fannie May, buyers will have trouble getting a mortgage and owners will have great difficulty getting refinanced.

Owner occupancy is a prevalent problem with associations that have not regulated renting or conformed there condo docs./rule/regs. to address this issue.

Unfortunatly, you're probably going to have to wait it out.
  • November 30 2010
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Profile picture for MoniqueU
if you don't have more than 20,000 in a retirment account. call up the bank to do a loan modification. they are free. or just title fees.
you can also call hopenow.com. they work with the government.
if the big W has the loan, it may qualify for a no doc internal loan. they by-pass alot of rules since they service all their loans.
  • November 29 2010
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Not only is this a problem for refinancing your condo but it also makes it impossible for anyone wanting to sell a condo as Buyers cannot get loans with these current rules and regs.  Hopefully things will loosen up at some point but you may be stuck for now.
  • November 29 2010
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There are several lenders that do not look at occupancy ratios. If this is the only reason, shop around. You'll find a lender with today's competitive rates.

Happy funding, Rudi
  • November 29 2010
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Ceencee,

If you can find a lender who will finance what's known as a "non-warrantable" condo, then you might not have to wait until the occupancy ratio changes.  However, any such lender will typically not be offering "conventional" terms (fixed rates, etc.) as they are usually lending their own money (portfolio lending, as we say).

You are in a tough, but not uncommon, scenario when it comes to condos.  If you continue your search, it may be helpful to limit it to non-warrantable and see if anything that comes back is appealing to you.

Good luck.
  • November 29 2010
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