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Old 06-21-2011, 08:27 PM
 
Location: Midtown Sacramento
327 posts, read 569,664 times
Reputation: 363

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Hello,

We are considering putting in an offer on a condo in a multi-family building that is in the process of converting to three condos. We would be the first to buy a unit.

I talked with our bank today, and I was told that because we would be the first buyers in the building, we would not be able to obtain a conventional loan. We would need to do a portfolio loan, either 15-year fixed (can't afford that) or an ARM. (We would put 20 percent down.)

We have excellent credit and income. Is this normal? Are there any other options? If we go with an ARM, can we refinance once all the units are sold? Would the 50 percent owner-occupied rule apply?

Thank you for your help!
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Old 06-27-2011, 12:26 PM
 
Location: 92037
4,630 posts, read 9,350,767 times
Reputation: 1946
Quote:
Originally Posted by la_cavalière View Post
Hello,

We are considering putting in an offer on a condo in a multi-family building that is in the process of converting to three condos. We would be the first to buy a unit.

I talked with our bank today, and I was told that because we would be the first buyers in the building, we would not be able to obtain a conventional loan. We would need to do a portfolio loan, either 15-year fixed (can't afford that) or an ARM. (We would put 20 percent down.)

We have excellent credit and income. Is this normal? Are there any other options? If we go with an ARM, can we refinance once all the units are sold? Would the 50 percent owner-occupied rule apply?

Thank you for your help!
Hi cavaliere,

Hrm. I am curious about the 15 yr fixed.... Typically they are lower in interest rate than a 30yr. I dont know if you are aware, but your payment isnt 'doubled' because its a 30 yr mortgage cut in half. Although I would venture to guess this is how some folks might view it.

The difference may be a couple hundred dollars per month. Otherwise, an ARM is an option I would defnintely not do that. Interest rates are low and ARMs "typically" work in favor starting high with the chance it will go lower. Is it a 5/1? In other words, if interest rates are planning to go up in the next 5 years, it may even double beyond todays rates. If you look at this way, it may even cost more than the 15 year conventional

Last edited by shmoov_groovzsd; 06-27-2011 at 12:35 PM..
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Old 06-27-2011, 09:53 PM
 
4,567 posts, read 9,252,549 times
Reputation: 6663
Quote:
Originally Posted by la_cavalière View Post
or an ARM. (We would put 20 percent down.)
Do not do an ARM. Property rates will continue to drop. If you buy the condo for $100,000, try to refinance and the condo is worth $50,000 you will not be able to refinance and will loose everything. Foreclosure.
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