The Anna Maria Island Sun Newspaper

Vol. 11 No. 34 - May 25, 2011


Want a mortgage? Not so fast

So you want to buy a home or a second home or an investment property and take advantage of all the great deals around. Well, not so fast. You may think your financial house is in perfect order and getting a home loan will be a snap, but you may be in for the shock of your life.

"Cash is king," another little expression to come out of our current and previous financial disasters, has never been truer than now. According to local and national real estate brokers, most of their recent sales have been with all cash buyers, and there's a good reason for that. Obtaining mortgage financing has always been a difficult and complicated process, but Fannie Mae and Freddie Mac have upped their game passing along tougher and tougher guidelines to banks and buyers.

The minimum credit score that any borrower can have to even think about getting a loan is 620, 850 is the top score. Fannie and Freddie have also increased their emphasis on income relative to debt. For example, if someone's total debt payments exceed 45 percent of income, the mortgage will be denied. Previously this limit was 55 percent. This could eliminate very qualified buyers who should have no problem meeting that debt limit, particularly if they are interested in purchasing an investment property, even if that property will generate income.

There are also stricter guidelines regarding missed payments on credit cards, auto loans and other revolving debt. Previously, it was OK to miss a payment or two, but now one missed payment will hit the debt-to-income ratio because banks will add 5 percent of the outstanding loan balance to the debt part of the calculation.

Loans for condos can be even more difficult. If an association is facing some pending legal liability or if more than 15 percent of owners are behind on homeowner fees or if more than 10 percent of units are owned by a single entity, it could knock your application right out of the park.

New condo associations have even more problems, since in order to approve a mortgage, a majority of at least 70 percent of the units have to already be sold or under contract. This percentage was 51 percent before our financial crisis. The reason for this uptick in percentage is that condo developments, where the builders or sponsors still own a large share of the units, are more likely to get into financial difficulty if the builder or sponsor runs out of funds.

And just when you thought all your financial ducks were in order and you were good to go, you have to face the evil property appraiser. OK, the individual appraisers may not be evil, but their job has sure gotten a lot more difficult. Not only are they having a terrible time finding comparable sales within an acceptable timeframe, but now they have to deal with additional guidelines.

In an attempt to keep appraisers at arm's length from lenders, a financial reform bill was passed on April 1, creating a middle man between the appraisers and the lenders. Not only can appraisers no longer discuss the appraisals with lenders, but the cost of the appraisals has almost doubled to compensate this middle man. Guess who's paying for that.

Even if your application for a mortgage is ultimately approved, by the time you get to that point you'll feel like you were put through a meat grinder. Cash is king. King Midas would agree with that, but unfortunately, we all don't all have the Midas touch.

Real Estate Transactions
Real Estate Transfers from Jan. 1 to 31, 2011
Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

01/21/2011 329,000 310,000 612 North Bay Blvd None SF Res
01/25/2011 1,474,000 1,050,000 103 SeaGrape Ln None SF Res

Bradenton Beach

01/31/2011 179,900 152,500 611 Gulf N Dr # D23 None Condo Res
01/14/2011 299,000 280,000 244 17th St N # 25 None Condo Res


01/27/2011 169,000 150,000 4227 126th W St None SF Res
01/24/2011 749,000 722,000 12519 Safe Harbor Dr None SF Res
01/21/2011 736,800 728,800 12310 BayPointe Ter Reo/Bank Own SF Res

Holmes Beach

01/18/2011 244,700 222,000 3402 Sixth Ave # 3 None Condo Res
01/21/2011 275,000 250,000 6400 Flotilla Dr # 11 Short Sale Condo Res
01/28/2011 349,000 310,000 6200 Flotilla Dr # 293 None Condo Res
01/20/2011 334,900 304,000 6313 Gulf Dr None Condo/TH Res
01/12/2011 699,900 500,000 5808 Gulf Dr # 109 N None Condo Res
01/05/2011 475,000 425,000 526 70th St None SF Res
01/21/2011 498,900 475,000 213 70th St None SF Res
01/14/2011 575,000 570,000 206 55th St None SF Res
01/28/2011 619,000 580,000 309 68th St None SF Res
01/14/2011 1,999,000 1,775,000 717 Key Royale Dr None SF Res
01/31/2011 359,000 345,000 307 63rd St None Duplex Inc
01/21/2011 1,000,050 1,000,050 534 70th St Cash Vacant Land


Source: Manatee County Property Appraiser’s Office

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