Condotel And Non-Warrantable Condo Mortgage Loans


Condotel And Non-Warrantable Condo Mortgage Loans

Condotel and non-warrantable condo units are becoming increasingly popular in Florida and other parts of the country.  Condotel and non-warrantable condo mortgage loans are now available for primary, second/vacation homes, and investment homes mortgage loan programs.  Condotel and non-warrantable condo mortgage loans lenders are portfolio lenders where they hold the condotel and non-warrantable condo mortgage loan in their books and not sell the loan to the secondary market.  To qualify for our condotel and non-warrantable condo mortgage loan program, the unit needs to have at least one bedroom and a full sized kitchen.  The condo hotel complex needs to be financially sound with no more than 10% of the units under foreclosure and the condotel homeowners association needs to have sufficient reserves.  Condo Hotel projects that are on the verge of bankruptcy or has many structural issues and outstanding building violations would not qualify for condotel and non-warrantable condo mortgage loan programs.

Borrower Qualification Requirements For Condotel Loans

Condotel mortgage loans and non-warrantable mortgage loans have their own mortgage lending guidelines and are pretty strict.  The borrower needs to have a minimum credit score of 680 FICO and not have had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale in the past 7 years.  The borrower cannot exceed a debt to income ratio of 40% which includes the borrower’s current housing expenses as well as the new condotel mortgage loan and housing expenses.  The condotel mortgage loan borrower needs to have at least one year’s of reserves for both their primary residence as well as the new condotel unit purchase.  Reserves does not have to be in cash.  Only three months of reserves needs to be in cash the the balance can be in investment funds, IRA’s, or retirement accounts.  The condotel mortgage loan borrower needs to put a 25% down payment for primary residence and/or  second/vacation homes condotel and non-warrantable mortgage loans.

Condotel And Non-Warrantable Mortgage Loan Process

To see if you are qualified for condotel and non-warrantable mortgage loans, you first need to have your condo hotel complex homeowners association manager complete a one page condominium questionnaire.  The completed questionnaire is then submitted to the condotel underwriting department for review and to check if the condo hotel complex is in sound financial status and there are no building violations and/or pending litigation in the pipeline.  Within 24 hours, the condo hotel project can get an approval which means the next step is to process the condotel mortgage loan borrower or borrowers.  The borrowers can complete the 4 page mortgage application and submit financial such as two years tax returns, two years W-2s, 60 days bank statements, recent paycheck stubs, and other documents that the mortgage loan originator requests.  Once all the docs and the signed mortgage application is in the hands of the mortgage lender, the condotel mortgage application will be processed and submitted to the underwriting department.  When the underwriter issues an approval, the file then goes to a credit committee which will most likely approval the condotel mortgage application.  The appraisal is then ordered and the borrower will get a conditional condotel mortgage loan approval.  Once all the conditions have been met and the appraisal is valued at the purchase price amount, the condotel mortgage lender will issue a clear to close.  A clear to close is issued when the mortgage lender is ready to fund.

Gustan Cho

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