Clearwater Beach Condos for Buyers – Cash is King and sometimes your ONLY Financing option when Buying Florida Beach Condos
Clearwater Beach Florida – I had a buyer from Brazil contact me yesterday excited about coming to Clearwater Beach Florida to buy a condo in February. She shared Clearwater beach condos & communities that interested her and I asked her the most tactical planning question I’ve found for buyers planning purchase of Clearwater beach condos (especially a second home / vacation home) in today’s Florida real estate market…Will you be paying cash or financing?
Are you paying cash or will you need a mortgage…because it will affect your Beach Condo choices..
Me: I told her that “I’d set up a search for her once I knew her plans since many condos are not eligible for financing”
Her: “Hi Cyndee, thanks for the quick response. Not eligible for financing? Why would this be? Thanks”
I realized when she asked that question that many of our readers and buyers planning to buy a beach condo this winter may have the same questions and not be aware of what’s been happening with Fannie Mae and that there are new hurdles in getting a Tampa mortgage and even when you do qualify you need to plan to have 30% or more for a downpayment (up from 20% this summer)
6 Reasons you may not be able to get a Tampa Mortgage for Clearwater Beach Condos today
Unfortunately, Florida still has the “honor” of having the second highest foreclosure rate in the nation and at the top of the list, are condos, especially those that are not primary residences. Additionally, mortgage investors in general, consider Florida to be a declining market (whether still true or not) and as such are very conservative about 2nd home condo purchases in Florida particular.
This past year Fannie Mae added several restrictions making it more difficult for developers and current owners to sell their units. The government-backed mortgage-finance company stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have been sold, up from 51%.
See article detailing: Fannie Mae Mortgages tighten for condos
addition, if Clearwater Beach condos for sale finds itself in one of the following situations then lenders aren’t approving loans for any condos in buildings. This is true for Clearwater Beach condos where:
- 15% of current condominium owners are delinquent on association fees; The calculation was also changed this past year from being 15% of the total fee payments to 15% of total units.
- More than 10% of units are owned by a single-entity. Apparently, this was to keep the so-called “vulture buyers” from taking over project; In addition, they also want to see only a limited number of non-owner occupied units as well.
- The condos must be “warrantable” – each approved individually and this can change month to month
- The homeowners association must have at least 10% of its budgeted income designated for replacement reserves and adequate funds budgeted for the insurance deductible; Many older condo associations keep woefully inadequate reserves and operating budgets, so they are non-compliant
- No more than 20% of a condo project can consist of non-residential space. There goes most mixed commercial-residential use projects
Buyers face more hurdles in financing Clearwater Beach Condos
and #6) This one is specific to foreign nationals. There is currently no one we’ve been able to find lending to foreign nationals due to the issues that revolve around lenders options when a borrower defaults and is not a US citizen. (If you know of anyone please let us know 🙂 The one exception is we still have one lending source for Canadians (a bank that is located in both countries even though it is HQ in Canada)- Our experience has been that all other foreign nationals are finding they have to purchase with cash regardless of the condo situation.
If a Clearwater beach condo and the borrower both do qualify under current lending guidelines then there is an additional amount to budget for it’s HO6 which is now required. Borrowers must now obtain a condo unit owners insurance policy unless the master policy provides interior unit coverage; coverage may not be less than 20% of the assessed value.
A condo-owners policy, known as an HO-6 policy, covers personal property, personal liability, and the physical unit from the studs and in. Many policies also include special assessment coverage or the option to include a special assessment coverage rider since these assessments have caused several borrowers to be foreclosed on since they couldn’t pay them and the HOA can then foreclose on the owner – which is definitely not good news for the lenders or the owner. This came about because when we experienced hurricanes in 2004 many people didn’t have enough insurance for the “inside of their condo” and many communities had issues with condos not repaired, mold, etc. so in an effort to protect all owner’s in the communities investment it is now regulated that every borrower must carry this coverage. (This just went into effect this past month)
I hope information was helpful to you as well…
Do you have a question you’d like me to answer about what’s happening today in Clearwater beach real estate?
Just email, call or leave a comment and I be separate myths from our current realities…
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Copyright © 2007-2009 Jack and Cyndee Haydon, Clearwater REALTORS and specializing in Clearwater Florida, Clearwater Beach Florida, and Pinellas County Waterfront homes and condos. Information is deemed reliable however it is not guaranteed and subject to change at any time.