The co-op to condo conversion process can seem daunting at times. In order to make it more manageable, we have compiled a list of frequently asked questions from the mortgage perspective to help you as you consider your options.
Why do I need to refinance if I have a mortgage already?
When you have a mortgage on a co-op, you are carrying your proportionate share of the underlying mortgage and your lender has a security interest in your shares. Your shares will be cancelled on conversion to condominium, and you will be given a deed to your apartment. At that point you will need a different type of mortgage secured by a lien against your actual apartment. Additionally, in order to convert, every owner must not only pay his/ her proportionate share of the underlying mortgage but must also cover his/her share of the closing costs which include legal fees, title fees, insurance premiums, escrow fees, consulting fees, etc. Your share of these fees can be rolled into your mortgage loan provided that you qualify by income, credit and equity so that you do not have to pay them in cash.
What kind of mortgage loan can I get?
We will seek to get project approval through Fannie Mae. Once the project is approved, we will be able to close fixed rate loans, adjustable rate loans, purchase loans, refinance loans, etc.
What if I do not qualify for a mortgage?
Since we are starting the process 6-9 months before the loans will actually close, we have plenty of time to prepare borrowers to qualify for a mortgage. Some of the different options available to us during this time include
• Credit repair
• Negotiating down and settling Credit Accounts in Judgment
• Disputing unknown or inaccurate entries in credit report s
• Paying down credit accounts to qualify for debt to income ratios
• Finding a co-borrower if necessary (occupant or non-occupant)
Do you have alternative mortgage products available?
If you do not qualify for a traditional mortgage, we may have an alternate solution for you. Contact us directly so that we may discuss your individual situation.
Can I use this opportunity to do a cash-out refinance?
Absolutely. As long as you qualify by income and credit and you have the necessary equity in your apartment to do so, we would be happy to do a cash-out refinance on your apartment.
What if my mortgage is under water?
Once your co-op is converted to a condominium, it will increase in value. You may no longer be underwater when you refinance your mortgage.
That said, each situation is unique and is taken on a case by case basis. Whatever the situation, we will work with you to ensure that you have viable options at your disposal.
Can I get a mortgage from a bank other than the preferred lender?
You are free to consult with and get your mortgage from a different lender. However, you should keep the following facts in mind. The preferred lender is the lender submitting your development’s applications to Fannie Mae. They are already familiar with all of the details of the development and because they are in control of the submission, they know when and how the conversion will take place and all of the complications that may exist. The preferred lender will actually commit your loan before the conversion, even though the collateral (the apartment) backing the loan is not yet in place. Other banks may not be willing to do so. The preferred lender is in the position to provide the borrower with the most streamlined and secure mortgage experience.
How do I know if I will qualify?
We can pre-qualify you for your mortgage right now, even before you decide whether you want to vote for the co-op to condo conversion. Just click below to get started.