Mortgage Turndown? Its not You!

We've all heard about people getting turned down for their mortgages, often at the final hour. But what you probably dont know is that more often than not, the turn down is not because of the buyer but rather because of the building.

One of the outcomes of the financial crisis and reorganizing of the banks was that the building that a coop or condominium unit is located in is coming under much more scrutiny. No longer will banks write loans if the building has a large number (more than 25% of the residents) renters. The owner occupancy rate must be 75% or more. In new buildings, more than 50% of the units must be in contract before a loan can close.

We are beginning to see listing brokers advertise properties as " Cash only purchases". This is not because the seller is looking for a quick and easy deal but rather because the listing broker knows that financing on this property will be nearly impossible.

One suggestion to avoid the risk of a building not measuring up is to have your mortgage broker research the building before you negotiate the price. And remember that in good times or bad cash is always the best offer.