First time homebuyers are often attracted to investing in condominiums being that it is considered as the most affordable option. However, federal rules have not made it easy for them to get mortgages. But that could change with the newly presented rules by the Federal Housing Administration last week, Miami Herald reports.
As part of the new rules, first time home buyers can benefit from a 3.5 percent-down loan offer. However, this favorable loan only applies to condo buildings that are 50 percent "owner-occupied." That being said, renter and vacationers-occupied buildings are out of the equation. A temporary rule that will stand for one year considers second homes as owner-occupied, given that they do not belong to investors.
Now, condos under South Florida's large snowbird population is entitled for financing, giving buyers more options and giving sellers a field day in unit disposal.
So what happens when this new rules expire? The FHA, in a statement, explained that they are preparing for a "more comprehensive condominium rule change." They couldn't have shown this commitment to service at a more perfect time given the amount of criticisms they have received from politicians and real estate professionals who believe that the old rules on condos were not low-and-middle-income-renters friendly; making buying their first home a distant possibility.
Members of the congress have expressed their dismay through a letter to Housing and Urban Development Secretary Julian Castro. In it they cited the FHA for imposing "significant restrictions" on condo financing, despite the fact that condo units often are "the most affordable homeownership options for first-time buyers, small families, urban and older Americans." A spokeswoman from HUD said that the letter is being reviewed; however, no immediate response has been made.
The FHA's process of loan approval before the financial crisis was done on a unit-by-unit basis instead of considering the building as a whole. South Florida based mortgage lender Brian Tewes believes that going back to the old system will be good for the market with the surge of available properties.
