Tuesday, May 3, 2011

New FHA Condo Rules now in effect.

The FHA has always required that a condo be specifically approved for FHA lending. The government wants to make sure that the Condo Association is properly constituted and on a sound financial footing. Last year when high foreclosure rates started appearing in Florida and Arizona, FHA decided that all existing approvals needed to be re-certified during 2011.

Because FHA is such a big part of the mortgage market, Buyers and Sellers contemplating a condo transaction need to check the current eligibility of the property. This website shows all FHA approved condos including those with expired or pending approvals.

The renewal of an expired approval can be accomplished by certain authorized lenders.  The process is called DELRAP.  A renewal application sent directly to HUD is called HRAP. Condo Associations can also initiate a renewal but the process can be complicated.  Some Associations may be unwilling to incur the effort or expense.

Baltimore Flashes a "Buy" sign vs. Renting

The popular realty website Trulia.Com keeps track of rental rates and selling prices across the country. Periodically they rate markets whether renting or buying is more advantageous based on rents and prices. This is something we have written about in previous posts. Baltimore is now clearly in the camp of buying being a much better deal. Trulia reports that the average selling price in the Baltimore Area only 12 times the annual rent. This means that a  house that rents for $1,500 a month will sell for about $216,000. A, 90% mortgage on this house would have monthly payments, including taxes and insurance of about, $1,250.  Not only is this less than rent but there are tax advantages as well. Also, the monthly payment won't  increase like rent. To read a full report on this subject including a data map on the entire US, click here.