2/7/14 What’s your QMIQ? What’s it got to do with a Milwaukee condo search?

QM

The buzzword – or in this case, buzz letters – in real estate this year. They stand for ‘Qualified Mortgage.’ Very simply put, a mortgage that’s qualified or prepared, and for those qualified buyers issued, under an exacting process. The rules for this type of mortgage went into effect in January.

The advantage is the possibility of a lower interest rate and a more secure mortgage.

The disadvantage is the qualifying process itself. Not only more information but more detailed information must be provided to the lender before a final financing approval.

These new rules apply for condo loans, too. But there are other sound steps to follow, as well as applying for a loan. Get a copy of the Executive Summary for the condo association where you’re interested in buying, before you make an offer to purchase. You can also ask to review the condo docs., and minutes of association meetings. When you do make an offer, as part of the process, the seller should obtain updated documents for the buyer, though some might need prodding to follow through. Prod. It’s vital information.

The 'docs' a.k.a. Condominium Documents, a buyer's Bible

The ‘docs’ a.k.a. Condominium Documents, a buyer’s Bible

There’s a new hurdle, in the shape of the ‘Condominium Project Certification,’ set up by HUD (the federal Housing and Urban Development agency) to determine types of mortgage eligibility. To be completed by the management company or by an officer of the condo association, this details the number of units currently completed, owner occupied, or rented within a project. It also covers such details as litigation, commercial percentage, and delinquent condo fees and is subject to frequent revision, as these parameters frequently change. Some buildings don’t conform to guidelines for FHA warrantable condos.

I’ve attended seminars on this subject, and for the average or first time buyer, it’s complicated.

Your best move? Now more than ever, meet with a lender as soon as you start to think about an upcoming property purchase. Work out the financial details in advance to avoid delays and frustration down the road. Use your own bank’s lending service or meet with other lenders to learn all your loan options. I can recommend local lenders with whom I’ve had successful transactions who are up to speed on these new regulations.

When you do this up front, your condo search will be faster and more productive.