Clearwater Florida
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Clearwater Beach Florida Condos | Buyers and Sellers Hurt by Jumbo Loans
April 12th, 2009 Categories: Clearwater Beach Florida, Clearwater Florida, Condos for Sale, Sand Key Florida, Tampa Mortgages
Clearwater Beach Florida - As most of our readers know we work hard to get great deals for our Clearwater Beach condo buyers unfortunately there are some great buys on luxury condos in Clearwater however one of the major roadblocks interested buyers encounter is the fact that in the Clearwater Beach Florida / Sand Key Florida area the allowable Fannie Mae loan limit for conventional loans is only $417,000 with at least 20% down.
Now I would agree that in most areas of Clearwater real estate - this would be plenty, however, when you consider we’re home to some of the best beaches in the United States, it’s not nearly enough if you want to buy a typical beach condo and are looking for a reasonable loan.
Even if you were planning on buying a condo and putting 20% to 25% down it’s a problem because most Clearwater Beach Florida oceanfront 3 bedroom condominiums are still selling from $800,000 to well over $1 million dollars even in today’s real estate market.
Related article:
- Clearwater Beach Real Estate - What do 3 bedroom Beachfront Condos cost?
- Clearwater Beach New Construction - What’s Happening?
- Sandpearl Condos - One of the best places to live in Clearwater Beach Florida
Clearwater Beach FL Jumbo Borrowers Squeezed and so are Sellers
So what does this mean for the Sellers with Clearwater beach condos they are looking to sell?
In my experience…
1) Clearwater Beach low conventional loan limits are causing a lot of mortgage pressure to purchase properties for $520,000 (or less) give or take so a buyer can buy a condo with a loan of less than $417,000.
2) Clearwater Jumbo rates (and terms) further limits the number of ready and willing buyers in this “jumbo” price point - so with less willing and able buyers there is again more pressure on sellers to make a deal with the remaining buyers - and we’re seeing cash is king. Our last two beach condo buyers paid cash for their gulf beachfront condos.
What’s hard to believe is we are currently working with many buyers who are the best clients a mortgage lender could want (excellent credit, no debt, no issue with income qualifications) and yet they are not willing to buy a second home / vacation home under the recent terms one National bank / lender gave … For Jumbo loans on beach condo purchases needing a loan over $417K but under 1 million they didn’t even offer a fixed rate loan only a 5/1 ARM at 5.75% with a 1% point so basically when conventional home buyers are getting mortgage rates under 5% - some of the best possible borrowers are being asked to pay a premium of almost 7% and up.
When I asked “why?”, the banks told me that it’s because “Jumbo Loans” are currently the highest loans in default. Unfortunately, those I see in preforeclosure and foreclosure on the beaches now are very different than the potential buyers we are seeing. We all know lending had loose guidelines back a few years and many real estate buyers got in way over their heads - these are not the buyers we are working with today.
77% Pending Sales of Clearwater Beach Condos and Sand Key Condos are NOT Jumbos
There are currently 22 Clearwater condos under contract and pending sale in the Tampa Bay MLS - of that 17 of them has a listed purchase price of under $420,000, 4 are in the $600K’s and one is pending at $849,000 (all of which could be lower on closing - we don’t know the negotiated purchase price at this point). It’s not surprising that it was recently reported that 50% of all real estate sales in Florida this year have been cash transactions.
In our experience, today’s Tampa mortgage rates for Jumbo Loans have caused several of our clients to scale back their Clearwater beach condo purchases and others have postponed them while they free up additional funds to make up the difference in purchase price and “conforming loans”. We’ve seen several people who planned on buying beachfront condos for @$800,000 and now have scaled back $200-300K to qualify for the conforming loan rates and terms.
So if you are a seller on Clearwater Beach Florida today (or Sand Key, Island Estates and our Gulf beaches) the best thing that can happen for you right now is that Banks get bank into the Jumbo loan market and begin to offer more attractive Jumbo Loan rates and terms for these willing Clearwater Beach buyers. With rates where they are - if Jumbo’s loosen up many of our buyers tell us they would prefer a larger more expensive condo if there aren’t punitive lending terms for them.
Well there was some good news this week….
Clearwater Beach Real Estate gets some good Jumbo Loan news
Today I read an article that stated “that the hard-to-find jumbo loan may be making a comeback. Bank of America is among the major banks rolling out jumbo mortgage programs and holding the loans in their own portfolios.
It will offer loans from $730,000 to $1.5 million with 30-year fixed rates under 6 percent; but borrowers must make a 20-percent downpayment, have good credit, provide proof of income, and hold six months’ of principal, interest, property tax and insurance payments in reserve.”
I know we are constantly working with local bankers who offer in-house “portfolio loans” - we can only hope that other banks, both local and national, will follow Bank of America lead in the Jumbo loan market. If you have questions and need a good local banker, give us a call and we can introduce you to several good lenders and we will continue to keep you posted on what’s happening on our beaches.
Clearwater Beach Real Estate - Selling or Buying - Waterfront Condos or Homes - We Can Help!
If you’ve been thinking about buying or selling a waterfront or oceanfront beach condo or house in the Clearwater St Peterburg Tampa Bay area…
Call Us Today at (727) 710-8036 to hear more about how we can help you!
Contact us for a FREE quote and to find out your Tampa Mortgage options and you can search all Tampa St Petersburg and Clearwater condos for sale right now..
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.
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Clearwater Condos have new hurdle in getting a Mortgage now - Bargain Hunters Beware
January 26th, 2009 Categories: Clearwater Beach Florida, Clearwater Florida, Community News, Condos for Sale, Tampa Mortgages
Clearwater Florida - It’s the time of year when we get lots of calls from people from NY, PA, OH, MI, Canada and more come down to looking to buy a Clearwater condo and those closer to Clearwater Beach Florida the better. Well now buying one of these condos just got a lot harder and darn near impossible if you’re not paying cash. Fannie Mae has slapped Florida with new tough guidelines - to learn more check out this recap from the The Miami Herald on the the new Florida Fannie Mae Guidelines for Clearwater FL condominiums.
“The standards, which took effect last week and apply only to Florida, include requiring that no more than 15 percent of a building’s unit owners be delinquent on association fees as a condition of funding home loans to new buyers.
Fannie Mae buys the majority of Clearwater Florida home loans from lenders, so it wields significant power in the making of mortgages. Fannie-backed loans generally offer the best rates and lowest down payments for borrowers.”
New Fannie Mae Clearwater FL Condo Mortgage Guidelines
“Fannie Mae has issued new guidelines that Florida condos and condo conversions, and, in some cases, old condos, must meet before it will fund loans:
- At least 70 percent of the units in new condos must be presold.
- No more than 10 percent of units can be owned by a single entity.
- No more than 15 percent of units in all condos can be more than 30 days past due on association fees.
- No more than 20 percent of a condo can be devoted to commercial use.
- All condos, new and old, must have fidelity insurance, which protects association funds from fraud.
- The seller is not allowed to help with down payments or offer other perks, like deductions of association fees, unless they are disclosed.
- Condos must have hazard insurance.
- When investors buy in established projects, at least 51 percent of units must be owner-occupied.”
Source: Miami Herald
The dilemma may not be obvious to you if you’re just starting to “look for Clearwater condos that are bargains” which is what people ask us everyday. Let me give you an example of how these changes may effect you now. There are some Clearwater properties that were built in the height of the real estate boom - it was not uncommon back then for someone to pay homeless people to wait in line so they could get a spot in the new construction because many believed there was no way not to make money and for a long time that seemed to be true.
Now fast forward to 2009 - many of those speculative investors who bought and never intended to hold the condominiums are now ending in short sales and foreclosures others have lost money in the stock market and their situation has changed and their vacation property may no longer be affordable for them. With large monthly condo association fees they quit paying the association which presents additional problems and already burdens to the other condo owners. (This is why as your buyers agent we recommend closely scrutinizing an association’s financials) Well now… if more than 15 percent of units in all condos are more than 30 days past due on association fees…then no buyers can get a Fannie Mae mortgage for those condos - WHOA! That’s HUGE!!!
So the end result is with the most distressed properties and bargains may have become “cash only deals” almost overnight. The communities most in need of buyers may actually be the most hrt by these new rules. If you are planning on buying Clearwater condos you should definitely have real estate agents, like us, to make sure you’re getting the latest information you need to make informed decisions in this dynamic Clearwater real estate market.
If you’re looking to understand all your Florida mortgage options for condominiums, please call Kevin Sandridge at 863-604-3019, or contact him via email at kevin.s@sigfunding.com.
Thinking of Buying or Selling Tampa St Petersburg Clearwater Condos
If you have been thinking about buying or selling a condo in the Clearwater St Petersburg Tampa area…
Contact us for a FREE quote and to find out your Tampa Mortgage options and you can search all Tampa St Petersburg and Clearwater condos for sale right now..
Call Us Today at (727) 710-8036 to hear more about how we can help you!
Copyright © 2007-2009 Jack and Cyndee Haydon, Clearwater REALTORS and your Clearwater Florida Real Estate Consultants specializing in Clearwater St Petersburg Tampa Real Estate and may not be copied, reproduced, distributed, transmitted, displayed or published.
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Tampa Mortgage Tips |How Property Appraisals impact Clearwater Home Buyers
October 28th, 2008 Categories: Clearwater Florida, Condos for Sale, Homes for Sale, Tampa Mortgages
How Property Appaisals effect getting Tampa Mortgages
Clearwater Florida - Property Appraisals are a necessary and important step in the home buying process. When we are working with people planning to buy Clearwater Real Estate we find there is a lot of confusion out there regarding the truth about appraisals. Some home buyers are confused about their purpose and often think of them as home inspections and others worry that a low appraisal for their property is the kiss of death.
We believe home buyers should take the time to learn the facts about real estate appraisals. The more you learn beforehand, the better prepared you are to tackle this crucial step in the home buying - home selling process. If you’re buying a home - your home loan approval is contingent upon the results of the real estate appraisal. It is as simple as no appraisal…no Tampa Mortgage or home loan.
Since very few buyers pay for a house with cash, the appraisal is going to be necessary. We recommend that even home buyers paying cash get an appraisal in this dynamic Clearwater real estate market (it’s another opportunity to negotiate to ensure you’re not overpaying for a property). If you are getting a Tampa mortgage or loan - is is never going to go through without an acceptable appraisal.
The Appraisals Role in the Home Buying Process
The purpose of the appraisal is to establish the homes market value at this point in time. The homes sales price will need to be equal or less than the market value as determined my the appraisal to be able to qualify for a Tampa mortgage and home loan. Obviously banks don’t want to lend more than a property is worth.
The main goal of the appraiser is to protect the Tampa mortgage lender. Lenders don’t want to be stuck with any Clearwater property that is not worth its price tag, so the real estate appraisal must be completed before the lender will approve the loan. The information contained in appraisal is invaluable to the lender. The lender will study the details of the appraisal before reaching a final decision.
Can I choose my own Appraisal when buying a home in Clearwater?
Buyers, especially first time home buyers, often think they get to choose the appraiser. This is not typical and it makes perfect sense because if the banks are going to be funding the majority of the transaction in loans like FHA (where 97% of the purchase price is funded by the mortgage lender), they should be aware of the property’s value.
Our experience is the lender will usually dictate the choice of appraiser. It might have one in house or through a contract with an independent appraiser. After the recent sub-prime mortgage crisis we’ve seen banks even dictating who the local Tampa mortgage broker which appraisers they’ll use to ensure they get as accurate an appraisal as possible. Banks can fear appraisers with close relationships to a mortgage lender might be tempted to be “too optimistic” to get a deal done. If you go with your own choice for appraiser, they may be subject to final approval from the lender - be aware that this can result in your paying for two appraisals.
How do Appraisers determine the Clearwater property market value for a home I want to buy?
Residential properties are normally appraised using either the sales comparison approach or the cost approach. When using the sales comparison approach, an appraiser compares the property to similar properties that have sold in the area and bases the market value on the comparables or comps. The cost approach is based on the costs to build, which means it is more appropriate for new properties. All the appraisals our buyers have received to get their Tampa mortgage in the last 3 years have used the sales comparison approach.
This is where we are seeing recent Tampa Bay short sales, foreclosures and distressed sales causing big swings in property values in even the best neighborhoods month to month. In today’s Clearwater real estate market appraisals actually help protect the home buyer from over paying as well.
What is included in a Clearwater homes property appraisal?
The actual appraisal reports are very detailed. They contain information about the subject property along with comparisons of a few similar properties. There is an evaluation of the overall house market within the area. The appraiser will then list any issues that he or she feels might diminish the property’s value. The next component is a list of any serious problems like bad roofs or weak foundations.
The appraiser then gives an estimate of the sales time for the house. Finally, the report will indicate the type of property. It is important to note that the real estate appraisal is not the same thing as an inspection. The appraiser might make note of any problems they see, but they are not responsible for declaring if your home is in good condition or not.
They are only responsible for assessing the property and determining the market value for the lender. A home inspection is a different process altogether. Real estate appraisals only include the home, the land, and any improvements to the land. It does not cover any personal property that might be sold with the house. The buyers should purchase those items separately.
What all goes into an appraisal? Appraisers are looking at the condition and size of the house, its proximity to good schools, and the size of the lot. Appraisers do not look at dirty dishes or overflowing laundry baskets. They do care about chipped paint, broken windows, and appliances that don’t work.
What happens if the Clearwater home I want to buy doesn’t Appraise?
Everyone fears the possibility of a low appraisal in the home buying - home selling process. It happens all of the time, usually during closing.
Here are 4 things you can do to remedy this common but stressful situation.
- Have your Clearwater Realtor do a detailed Comparable Market Analysis and research to evaluate “current market value” before making an offer to buy a home;
- The property appraisal can always be disputed and you can pay to have another appraisal done and hope for a different result (this will cost you another $350-400 and is usually a strategy used when you’re dealing with a unique property where comparables are difficult)
- Your real estate agent can negotiate with the seller to ensure the price you are offering to buy a property for is within the banks appraised “current market value” - with so many Clearwater homes for sale today - serious home sellers understand a buyer can’t pay more than a bank will lend so this is usually how we see discrepancies resolved when there’s a motivated home buyer and home seller.
- The buyer can make a larger down payment - however this strategy is usally used in a market where property values are rising - I can’t imagine why someone would do that in a declining market.
In today’s market we help our home buyers avoid this situation by always doing extensive research and analysis before they make an offer (so the buyer doesn’t pay for an appraisal and waste their time and money on a Clearwater home that won’t appraise for the price the buyer is thinking of offering. ) This educates the buyer as well as protecting them from wasting @$300-$400 for an appraisal on a home that they won’t get a loan on…at that asking price.
Do you have questions about buying a home or Clearwater property appraisals? Just ask - we know an educated home buyer or home seller is our best client!
Call us Today at (727) 710-8036 to hear more about how we can help you!
Copyright © 2008 Jack and Cyndee Haydon, Clearwater REALTORS and your Clearwater Beach Real Estate Consultants specializing in Tampa Bay Real Estate and may not be copied, reproduced, distributed, transmitted, displayed or published
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