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Non-Warrantable Condos

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Tax-Image1When you want to finance a home, you must apply for a mortgage. If you meet all of the requirements of the lender, the lender will approve your mortgage. After that, the lender has two choices with that mortgage: hold on to the mortgage or sell it to a company like Freddie Mac & Fannie Mae. Most of the time lenders sell their mortgages; this is known as secondary mortgage market. The money that the lenders receive by selling the mortgages, will allow them to help other borrowers with their mortgage needs.

Non-warrantable condos are condominiums that don’t meet the minimum eligibility standards set by Freddie Mac & Fannie Mae. These cause two problems: first, these big two companies will not purchase the mortgage of that type of condominium and second, lenders will need to hold on to these mortgages without being able to sell them as secondary mortgages. In this case the lender will be in higher risk if the borrower eventually stop paying the mortgage.

There are many reasons why condominiums are considered non-warrantable condos. The list is actually long. If the condominium fails in any of the standards set by Freddie Mac or Fannie Mae, it will be considered a non-warrantable condo. Some of the reasons for a condo to fail the requirements are:

  • 10 percent or more of the building is owned by one entity
  • it has 50 percent or more of rental units
  • 20 percent or more of the square footage are for commercial purpose
  • there is some pending litigation
  • the building was sold as an investment

It doesn’t matter if the potential borrower has good credit and a good income. If the borrower want to finance a non-warrantable condo, the mortgage will probably be denied. Not a lot of lenders like to finance these types of condos.

Luckily, if you live in the New York State area, we can help you with your non-warrantable condo. We will take you by the hand through the steps of getting your mortgage.

PRODUCTS: Fixed rate mortgages, 5/1 and 7/1 ARMs.
TERM: Fixed: 15 or 30 years; ARM: 30 years
MINIMUM MORTGAGE: $50,000

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Contact us for more details about Non-Warrantable Condo Mortgages and to see if you qualify.  Contact us at (800)842-2910.

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