Written by Amy Sharpless – Senior Loan Consultant at Academy Mortgage Corporation
Amy Sharpless is a local mortgage broker who intimately understands the intricacies of the Park City resort real estate market, and in particular, Condo Financing. She can broker loans, or write her own loans. Amy is approachable and dedicated to my buyer clients. She works tirelessly and consistently goes many extra miles to satisfy endless underwriting conditions, evening closings or initial client meetings on weekends. As a guest blogger, here she speaks to some of the fine points of condo financing in Park City.
Because of the resort nature of Park City, getting a loan for a condo can be tricky. There are basically three types of condos; Warrantable (can get a conventional loan), Non-Warrantable (does not qualify for conventional loan), and Condo-Hotel (just like it sounds; it is part of a hotel).
When a property is identified for purchase the first step I take is to determine which category the property falls into. This is done by researching the legal description (is it a condo, townhome, or planned unit development). In Park City it may appear to be a condo from the outside but it is legally a townhome or planned unit development, so different guidelines apply. The condo project is looked up on the Fannie Mae and FHA websites to see if it is approved by either entity. Currently there are no approved condos in Park City. The project is checked to see if it is on any lenders Do Not Lend List. Next I Google the property and look for any association with nightly rentals, hotels, onsite check-in desks, and hotel-type amenities. This gives me an idea of what some of the challenges a particular property might have.
Next, the HOA fills out a condo questionnaire. There is a limited review and a full review.
Limited review requirements: primary home or second home, 80% or less loan to value, established condo projects, approval done by an underwriter, no occupancy ratio requirements, and no more than 15% owners may be late on HOA dues.
Full review requirements: primary, second home and investment, 80% or more loan to value, 51% of project owner-occupied or second home, 10% of budget for reserves, no single entity can own more than 10% of project, established and new projects, no more than 15% owners late on HOA dues, and approval done by condo department at a fee.
A brief list of items that make a condo non warrantable: managed as a hotel, hotel conversions, hotel or motel in name, onsite registration AND nightly rental, restrict occupancy, timeshares, co-ops, houseboats, 20% + of space is not residential, single entity owns more than 10% of project, or the HOA is in pending litigation.
If a condo is warrantable, the buyer can get a conventional (normal) loan, fixed rate or adjustable rate at current market rates. If the condo is non-warrantable or a condo-hotel the loan will have to go to a portfolio investor. They typically requires 30% down and only have adjustable rates available at this time (3, 5 and 7 years). The rates are usually 1%+ higher than a conforming loan.
Contact me for more information or specific questions.
Senior Loan Consultant (Sharpless/Hoyt Team)
Office 435-645-3923 – Mobile 435-640-1878 – [email protected]
NMLS ID: 294849 – License #: 5460939 – Company NMLS #: 3113 – State #: 5491140