Non-Warrantable Condominium And Condotel Purchase Loans

This BLOG On Non-Warrantable Condominium And Condotel Purchase Loans Was Updated On May 3, 2017

Non Warrantable Condominium and Condo Hotel unit buyers who are in the market for a Condo Hotel in Florida, be prepared to be overcoming some hurdles when dealing with Condo Hotel unit sellers or even Condo Hotel selling real estate agents.

  • Most Non-Warrantable Condo and Condotel sellers and real estate agents believe that Non-Warrantable Condominium and Condotel Purchase Loans are still nonexistent
  • Sellers and their real estate agents will be extremely leery of buyers tell them that they are looking to finance their non-warrantable condominium or Florida Condo Hotel Purchase.
  • I deal with this problem every week where I get Condo Hotel Purchase Buyers tell me that the selling agent of the Condo Hotel unit they are about to make an offer on will not even return their phone calls when they tell them they are financing their Florida Condo Hotel Purchase.

Types Of Non-Warrantable Condominium And Condotel Purchase Loans

I specialize in Non-Warrantable Condominium and Condotel Purchase Loans nationwide.

Here is the terms of non-warrantable condominium and condotel purchase loans: 

  • 30 year Adjustable Rate Mortgages
  • 3/1, 5/1, 7/1 ARM
  • Index based on Cost Maturity Index (CMT) and margin of 3.0%
  • Cannot be lower than started rate when the loan starts its adjustment mortgage rate start period
  • Non-Warrantable and Condotel Purchase Loans are also called portfolio loans
  • There is no pre-payment penalties on Non-Warrantable and Condotel Purchase Loans

Mortgage Process

The first step is to get you pre-approved for Non-Warrantable Condominium and Condotel Purchase Loans. Here are the simple steps of the mortgage application and approval process:

  • Just click on the APPLY NOW icon HERE. 
  • It is a secured online mortgage questionnaire. 
  • Once borrowers complete and submit the secured online mortgage application, a licensed loan officer will be alerted and will contact applicant to go over the questionnaire.
  • Second step is for borrowers to shop for a non-warrantable condominium or Condotel unit. 
  • Once buyers choose a non-warrantable or Condotel unit, the next step is to have the HOA complete a Condominium Questionnaire. 
  • It is a basic one page Condominium Questionnaire form that is required prior to proceeding to the next step.
  • The purpose for the condominium questionnaire is to make sure that there are no major pending litigation or that there is no pending bankruptcy on the condominium complex.

What Are Non-Warrantable Condominiums?

Non-Warrantable Condominiums  are regular condominiums in a condo complex where 51% or more of the units are owned by non-occupant owners. A warrantable condominium is where 51% or more of the units is owned by owner occupant condo owners. Fannie Mae and Freddie Mac will finance warrantable condos but not non-warrantable condos. There are many instances where a warrantable condominium becomes a non-warrantable condo when more than 50% of the owners are owned by investors.

What Are Condotels?

Condotels, also called condo hotel units, are a condominium unit that is inside a hotel complex or a condo unit that has a hotel like setting where there is a rental desk in the lobby or rental office. Major hotel chains such as Marriott, Hyatt, Westin, and the Trump Hotel Network has condotel units within their hotel complex. For example, a 30 story hotel may have 28 floors as regular hotel units and two floors owned by private individuals which are classified as condotels. Benefits of condotels is that the condotel unit owners can use it while they vacation and while they are not occupying it can rent it out for revenue. Condotels can make great second or vacation homes as well as owner occupant primary homes and condotel unit owners can cover most or all of their condotel expenses by renting out the unit. The homeowners association of the condotel complex can rent it out and do the upkeep for a percentage of the revenue they collect.

What Are The Requirements For Non-Warrantable And Condotel Purchase Loans

  • 25% down payment required on condotel financing for primary and second homes
  • 40% down payment is required for condotel loans if it is an investment property
  • Investment property is classified when the condotel buyer has two or more properties
  • 20% down payment on non-warrantable condo purchase loans
  • Condotel or non-warrantable condo needs to be at least 500 square feet plus have at least one bedroom and a full kitchen
  • Refinances on condotels are 75% Loan To Value on primary and second homes and 60% LTV on investment home loans
  • Minimum credit score of borrower needs to be at least 680 FICO
  • One year reserves of P.I.T.I. plus HOA on the subject property plus any other properties owned by the borrower
  • Reserves do not have to be in cash. It can be 401k, investment accounts, securities accounts, or other forms of assets
  • Closings on non-warrantable condominium and condotel purchase loans normally take less than 30 days

Buyers of non-warrantable condominiums or condotel units can contact Gustan Cho at 800-900-8569 or text Gustan on his cell phone at 262-716-8151 for faster response for more information or email inquiries to gcho@gustancho.com.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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