Fannie Mae Compliant` Presque Isle Villas
There are lots of condos in Chapel Hill. Lots of different price ranges, sizes and styles. A condo is a form of legal ownership not a building style. In a condo the interior space of a unit is individually owned with the land and parts of the building owned in common with the other owners. Condos in Chapel Hill usually specify individual ownership as “paint to paint” but this varies by community and is detailed in the Declaration of Condominium which is recorded in the court house along with the by-laws, restrictions and covenants.
A condo is different from a town home (another legal form of ownership) because in a town home the land under the home is owned individually and there may be common grounds owned collectively.
Why it it so hard to finance condos in Chapel Hill?
When I am contacted by a potential buyer who asks about condos in Chapel Hill I always take a deep breath because I know I will have to explain why it is so hard to obtain financing on some condos in Chapel Hill (although not all). I’m tempted to just say trust me, condo approval has to be on a case by case basis, there are no easy answers, but if you are interested here is a brief explanation.
Back in the days of easy real estate money, when just about anyone could get a loan with no money down, FHA loans (government insured loans) weren’t especially popular in Chapel Hill because there was really no need.
Then when lending standards became tight in around 2007 buyers started to really consider FHA loans because of the low money down, lower closing costs and easier credit qualifying parameters. Not many condo developments had gone through the FHA approval process (lots of paperwork ,time and often improvements required) but financing was still possible through an approval for the individual condo being sold called a spot approval.
Since 2010 spot approvals are no longer allowed by the FHA. All condo neighborhoods FHA approved before 2008 were required to be re-certified and then then approvals have to be re-certified every 2 years. This is expensive for the associations and they just aren’t being done by many condo associations. If an FHA approval expires you won’t be able to get the loan so it is important to check to see the status of condos you are interested in.
Even if a condo development is approved, FHA also requires that 51% of the condominium units be owner occupied. This is a big problem because the count can change from day to day so make sure your agent knows to check on the ratio before contract and also keeps track of any pending units and possible rentals if the ratio is close. You don’t want your loan denied on closing day because the ratios have changed.
Federal National Mortgage Association ( Fannie Mae)
Fannie Mae is a private corporation sponsored by the government that buys mortgages from lenders and guarantees loans. If the condo isn’t Fannie Mae compliant (called a non warrantable loan) you probably won’t be able to get financing on the condo. Fannie Mae has requirements that the HOA has to meet such as amounts of reserve funds, no litigation against the association and occupancy requirements.
So what condos in Chapel Hill are FHA approved and Fannie Mae compliant?
FHA approved condos in Chapel Hill that are approved today, December 9, 2013 are:
(Click on the condo name to see condos for sale in the neighborhood.)
|FINLEY FOREST CONDOS||A002217 001||341 FINLEY FOREST CIRCLE|
CHAPEL HILL, NC 27517
|ORANGE||HRAP||APPROVAL REINSTATED 6/6/96 FOR ALL PHASES (1-62) BASED ON FIELD REVIEW BY OFFICIALS FROM THIS OFFICE.||None||Recorded/|
|PROVIDENCE GLEN||A006193 001||500 PROVIDENCE GLEN DRIVE|
CHAPEL HILL, NC 27514
|VILLAS AT CULP ARBOR||A005872 001||CULP HILL DRIVE|
CHAPEL HILL, NC 27517
That’s it! As you can see there aren’t many FHA approved condos. If the condo is FHA approved it still has to be compliant so check with your lender.
To check which condos are Fannie Mae compliant you really need to check with a good local lender. Your agent can help with this by obtaining the sellers HOA disclosure and checking with the condo association to find out the investor concentration in the development and providing this to the lender.
If the condos are not FHA or Fannie Mae approved you will need CASH to buy.
By Marianne Howell Wright