Financing a Condo Purchase in Mammoth Lakes
Because of the financial crisis of 2008, lenders have made qualifying for a loan (for both the applicant and the property classification) extremely difficult, which continues to impact the potential to finance a condo purchase in Mammoth Lakes. This is mostly due to the potential “condo hotel” classification that lenders will assign to complexes that have a high percentage of nightly rentals, full-time tenants or have an on-site rental office.
For the buyer who needs to finance a purchase, the loan process has become very tedious, stringent and frustrating. Not only does the buyer have to be “gold plated” to qualify for a loan, but the complex itself must have “project approval” by the lender before getting started on the process. Without “project approval” the buyer is risking money spent on an appraisal, home inspection, etc. In the event the lender finds that there are too many nightly rentals or full time tenants, they will ultimately reject the loan. This happens frequently with out of area lenders.
One of the first questions I ask prospective buyers is whether they need to finance, which helps me narrow down available condos that have “project approval”. So far, only Wells Fargo Home Mortgage in Mammoth is the only lender who can successfully lend on condos that have “project approval”. For a conventional 30-year fixed loan on a second home, they will require 25% down payment. Applicants also need to have very strong credit scores (over 750 FICO) and show the proper debt to income ratios in order to qualify. It is customary to provide a loan prequalification letter along with an offer, which gives the buyer more credibility in the negotiating and offer process, however, the purchase contract states that the buyer has up to seven (7) days to provide a loan prequalification letter from the date mutual acceptance. In a few cases, I’ve seen buyers wait until after acceptance to apply for a loan only to find out that they can’t qualify or the condo they’re under contract to purchase doesn’t have “project approval”. In today’s tricky lending environment, buyers definitely don’t want to “put the cart before the horse”, which only leads to wasted time and effort (not to mention disappointment).
As of March 2013, Wells Fargo Home Mortgage in Mammoth cannot lend on the following condo developments: All Village Properties (Lincoln House, White Mountain Lodge, Grand Sierra Lodge), The Westin Monache Resort, Juniper Springs Lodge, The Summit (litigation by the HOA against contractor), Sunshine Village, 1849, St. Anton, Viewpoint, Sierra Park Villas, Mammoth Green (litigation by the HOA against the developer), Snowcreek II (litigation by the HOA against contractor), Solstice (litigation by the HOA against the developer), Eagle Run (litigation by the HOA against the developer), Meridian Court (litigation by the HOA against the developer), and Mammoth Creek.
For questions or more information, feel free to call or e-mail.
Verena Robinson, Broker
CA BRE License #01512209
Mammoth Lakes Resort Realty
Tel. (760) 924-8521