FHA approved condos, changes are a comin.

I wanted to give you a heads-up concerning something that is changing in the condo sales market that could affect many condo owners.

For those properties that are FHA approved (FHA loans only require 3.5% down so many first-time buyers or those will little cash to put down use this program a lot) they will have to get "re-approved" every year, which can take some time and could potentially block any FHA buyers from being able to buy at that property. (fewer potential buyers BAD, more potential buyers GOOD)

If a property had not been FHA approved a buyer used to be able to get a "spot-approval" to buy into that building. That ability is going away, thus potentially eliminating some potential buyers for the community.

As of Nov 1st FHA is also requiring that the reserve study be funded to at least 60% of else they will not give the buyer the loan. A reserve study is a 10-20 year plan (budget) of upcoming projects and how much they will cost in future dollars. Every month as the dues are paid part of those dues go into the reserve account to pay for those upcoming projects. If at any time the reserve account does not have at least 60% of the funds needed at that time then you cannot secure an FHA loan for the property. This could potentially, and severally, affect those lesser expensive units in the community that are on the market or will be on the market in the future. If your property doesn't have a reserve study completed then your property could have fewer potential buyers, and that's never good for a condo property.

As a condo owner you should approach your condo board and make sure they are aware of this pending change and ask the following;

• do they have a current reserve study? The new rule will also require that the reserve study be updated yearly and this should be budgeted accordingly.
• how funded is the reserve study?
• is the property currently FHA approved?
• are they planning to get "re-approved" in the near future.

Please let me know if you have any questions about these pending changes and the sooner you jump on these items, the better.