Posted by Julie on August 16, 2006 at 24:44:37:
Hi,
If you make a duplex into condos, but make themy fee simple instead of with an association, is this easier or harder? I would like to purchase a duplex that in many areas, that style, has been converted to fee simple condos. Any advice would be great.
Duplex condo conversion financing quandry - Posted by joel D
Posted by joel D on June 13, 2006 at 11:29:58:
I have a duplex with a mortgage from Chase and am looking at Condo’ing out. However, Chase won’t let me convert the existing mortgage to a condo mortgage. What are my options here? Do I need to refi for two condo loans? I will live in one unit and sell the other. Selling the one side will not yield enough $$ to pay off the existing mortgage on the duplex. What are the chances Chase will find out about me converting the property to condos and selling one? One mortgage broker mentioned that Chase maynot find out about it but that if they did they could call the loan due.
Thanks -
Joel
Re: Duplex condo conversion financing quandry - Posted by GMann
Posted by GMann on June 13, 2006 at 15:04:41:
You can’t sell the other unit because there is a lien on it. You would need to do a simultaneous refinance with the purchase. It will be a problem to do so because of the 3 day waiting period on a refi but it is a slim possibility of the lender waiving that 3 days.
Good luck!
Re: Duplex condo conversion financing quandry - Posted by joel
Posted by joel on June 13, 2006 at 21:06:38:
Would I have more luck doing this through a local bank or would any bank look at this. Would selling it on a lease option make any sense other than buying time on the conversion?
Re: Duplex condo conversion problems - Posted by GMann
Posted by GMann on June 14, 2006 at 08:57:36:
There are a couple of issues here.
#1 - Will the city/county allow you to turn the duplex into a condo?
#2 - Your condo complex will only comprise 2 units. That will create a non-warrantable condo and the choice of lenders will be greatly reduced. A warrantable condo fits the guidelines for Fannie Mae and it works off % of owner occupied units, % of control of the home owners association, etc.
#3 - The 3 day waiting period (3 day Right of Rescission) can be waived in circumstances where the need to waive outweights the benefit of the protection of the law. It is a judgement call by the lender but it is greatly frowned upon by the secondary markets (the entities that buy the mortgages)
#4 - You will need to set up a home owners association and a management company.
Turning a 2 unit into a condo will take some legwork with the city/county and probably thousands of dollars to convert. It’s much easier to just the whole 2 units.
Best of luck!