6/30/23 – Condo Insurance Issues

I have been in this industry for over 33 years and have never had so much fun! Well, more fun started this week with some insurance issues in Condominium complexes! We have underinsured condos and townhomes in West Creek/ West Hills here in the Santa Clarita Valley. They are not vastly underinsured, as they have $5 Million in coverage and need $239 Million in coverage. Just a slight variance. LOL! What does this mean? Fannie, Freddie, FHA, and VA are a no-go until they get the Insurance straightened out. Until then, we must go with the old faithful Non-Warrantable Condo Lender that requires at least 10% down and follows Fannie Mae’s findings. The rate is typically .75-1% higher than Fannie rates, and points can be 2-3-4 points when a buyer gets one of these loans. This should push the prices down in those complexes that are currently or will be affected by insurance issues. More importantly, when the complex does get its new Insurance, HOA fees will likely rise.

PLEASE NOTE: 

• This only affects ATTACHED Condos and Townhomes!
• These loans Do Not have Pre-payment penalties, so when the Insurance is corrected, your buyer can refinance IMMEDIATELY!
• When the Insurance is corrected, you may have a higher HOA fee. Your guess is as good as mine on how much that will be!
• We will see this issue in other complexes!

Interest rates had a bad day yesterday, and we have gained about 1/3rd of our losses today. Rates feel like they are peaking, but you never know when they will break through a barrier. Let’s hope the rising rates are due to the long weekend and nothing else.

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• Government Loans (FHA / VA) are in the high 5’s.
• Conventional Loans up to $726,200.00 are in the 6’s.
• High Balance Loans $726,201.00-$ 1,089,300.00 are in the 6’s
• Jumbo loans above $1,089,300 are in the 6’s
• 5/1, 7/1, 10/1 Arms are in the high 6’s.
• Bank statement loans - They are available with 10% down again! 7’s + depending on down and credit score.
• No income qualifier – 20% down with reserves! In the 8’s and 9’s!
• 0 down loans are in the mid to high 6’s – 660 credit score min right now, up to $740,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - are typically 7.99% with limited fees – But they get you where you need to go!
• 0 down California Dream for all Equity Share – Postponed until 2024!
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I am around all weekend and on all next week, if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!