Rossmoor is a unique community with some special financial
restrictions. When it comes to a condo the normal rules apply - you can
use any lender and as long as you meet that lender's requirement you are
all set. A co-op is a different ball game...
Up until January 2006 all buyers of co-ops had to pay cash. No loans
were available. That is no longer the case. There is one lender that is
approved for co-op loans in Rossmoor and they are National Cooperative
Bank (NCB). Considering they are the only lender working on co-op loans
they are still very competitive. There are special down payment
requirements for co-op loans in the three HOAs that consist entirely of
co-ops; 1st Walnut Creek, 2nd Walnut Creek and 8th Walnut Creek. Both
1st and 8th require 30% down on a loan and 2nd requires 20% down.
If you decide to pay cash for a co-op there are some additional
restrictions. Cash co-op buyers must show that they have approximately 4
times the monthly dues in income each month. Keep in mind that they are
looking at the entire monthly fee which includes the HOA dues plus
property taxes. Cash buyers also have to show that they will have
approximately $70,000 in liquid assets after the purchase of their
home. They put these restrictions in place to protect the HOA from cash
buyers that put all of their assets in to the purchase of the home and
don't have remaining assets to keep up with their living expenses.
Family members are allowed to sign a pledge saying they will help the
buyer with the purchase if they don't meet these financial requirements.
If a buyer doesn't meet those requirements, a condo might be their
best bet. There are no restrictions when you purchase a condo with cash
and you can use a lender that might not require a large down payment of
Why Pre-Qualify for a Loan?
Pre-qualifying for a loan makes you an appealing buyer in the eyes of
the seller. Pre-qualification approves you for up to a certain mortgage
amount, even before you look at your first home. Once you do start
looking, you won't waste time looking at homes you won't be qualified
for-and you'll be in a strong position to make an offer as soon as you
find something you like.
Selecting the best financing package available is as important as finding a home that meets your needs.
There are three factors to consider in determining how much you can afford:
Most loans require a down payment between 10
and 20 percent of the home price. If you are able to make a down
payment of 25 percent or more, you may qualify for special mortgage
programs offered by a variety of lenders.
Ability to qualify for a mortgage
Most lenders require
that your monthly mortgage payment, including principal, interest, taxes
and insurance, should not exceed 28 percent of your gross monthly
income. They also expect your total installment debt (regular scheduled
payments of 6 months or longer debt-car loans, credit card balances,
etc.), including the proposed monthly mortgage payment on your new loan,
not to exceed 36 percent of your gross monthly income.
In addition to your gross monthly income, lenders review your
employment history, stability, and potential for increasing your income.
They also evaluate any additional income, such as bonuses,
commissions and child support.
They will request a credit report to verify your debt repayment,
outstanding debt, and available credit. They will calculate your assets,
including checking and savings account balances, CDs, stocks and bonds.
Avoiding any late payments on credit accounts, and limiting your
credit purchases, helps keep your credit report in good standing. If you
have items on your credit report that could negatively influence your
ability to secure a mortgage, be prepared to explain each situation in
writing. You should also consider delaying major purchases until after
you've moved into your new home.
Closing costs typically range between 2 and
5 percent of your loan amount. These fees are due in cash at the time
of closing, or, in some cases, can be included in the loan.
Pre-qualification is always a good idea.
Taking the time to pre-qualify for a mortgage before you begin your
home search will put you in a much better negotiating position: your
pre-qualification assures the seller that the transaction will not be
delayed while you secure financing.
If you would like to learn more about financing options immediately, please contact us.