FINANCING YOUR CONDO, CO-OP, T

David Reed (Austin, TX) is the author of several books including Mortgages 101(978-0-8144-0166-8), Mortgage Confidential (0-8144-7369-6), The Real Estate Investor’s Guide to Financing (978-0-8144-8061-8), and An Insider’s Guide to Refinancing Your Mortgage (978-0-8144-0935-0). As a senior loan officer, he has closed more than 2,000 mortgage loans. He is a columnist for Realty Times and a contributing editor and columnist for Mortgage Originator magazine

CONTENTS



Preface vii



Chapter 1 Condos, Co-ops, and Townhouses: How Are They Different and How Are They Similar? 1

Condos 2

Co-ops 5

Townhouses 6

The Lifestyle 9

The HOA 12

Lawsuits, Fees, and HOAs 15



Chapter 2 What to Look for in a Property and How to Find the One That’s Right for You 17

Using a Realtor 18

Buying from a Developer 21



Chapter 3 Financing Your Condo, Co-op, or Townhouse the Right Way 29

Fixed-Rate Mortgages 30

Adjustable-Rate Mortgage 36

The Hybrid 39

Option ARMs and Negative Amortization 42

How Mortgage Rates Are Set 44

How Lenders Set Their Rates 47

Types of Mortgage Lenders 48

How to Find the Best Loan Officer 57

How to Find the Best Rate 62

Factors That Can Affect Your Rate Quote 71

How to Change Mortgage Companies Midstream 77

How to Lock in the Mortgage Rate 79

Debt Ratios and How Lenders Calculate Them 83



Chapter 4 Specialty Loans, Government Programs, and Refinance Loans 85

Interest Only 85

Equity 87

No Money Down 88

Government Bond Programs 89

Portfolio 90

Refinancing 91

Government Programs for Condos and Townhouses 104

Down Payment Assistance 113



Chapter 5 Rules Governing Loans for Condos, Co-ops, and Townhouses 115

Warrantable Versus Nonwarrantable Projects 122

Chapter 6 The Impact of Credit on Your Ability to Buy a Condo, Co-op, or Townhouse 127

Check Your Credit First 132

Find Out Your Credit Scores 136

Credit Score Facts and Fallacies 143

Credit Scores and Qualifying 147

Repairing Credit 149

Alternative Credit 155

Bankruptcies and Credit 156

Subprime Mortgage Loans 158



Chapter 7 Closing Costs: What They Are and How to Negotiate Them 161

Appraisal 162

Credit Report 165

Application Fee 165

Tax Service 166

Flood Certificate 167

Lender Fees 167

Mortgage Broker Fees 168

Settlement or Closing Fee 168

Title Insurance 169

Document Fees 170

HOA Fees 171

Attorney Fees 171

Courier Fees 172

Government Fees 172

Prepaid and Nonprepaid Items 174

Good-Faith Estimate 175

Using the Annual Percentage Rate to Compare Lenders 179

Negotiating Closing Costs 182

Fees and Refinancing 184

No–Closing Cost Mortgage 185



Appendix: Monthly Payment Schedules 187

Glossary 193

Index 221