Condo Hotel Mortgages
In this article, we will cover financing options for condo hotel mortgages. Condo hotel mortgages are making a comeback after being dormant for years. Condo Hotel units are individual condo units in a hotel complex. Condo hotel units are often referred to as condotels. There is a large percentage of condo hotel unit owners who still have their current condotel loans at high mortgage rates.
Condotels are becoming increasingly popular because owners can enjoy it as a second home and rent the condo hotel unit when it is not being occupied. Some investors own multiple condotel units for investment purposes. Condotel financing cannot be financed through conventional loans. Fannie Mae and Freddie Mac does not buy non-warrantable condo loans on the secondary market. Condo Hotel Mortgages are originated and funded by non-QM wholesale lenders.
Many of the condotel unit owners have their condotel mortgage loans with big banks such as JP Morgan Chase, Wells Fargo, Bank of America, Citibank, and other large condo hotel financing companies. Although condotel borrowers have been timely with perfect payment history, the big banks will not refinance their current condotel loans.. Big banks and most lenders have stops condo hotel financing since Fannie Mae and Freddie Mac will not purchase them on the secondary market.
Banks No Longer Fund Condo Hotel Mortgages
Unfortunately, big banks are not willing to refinance the condo hotel mortgages they are currently servicing. It does not matter if the borrower is a premier client with other assets with their bank. Big banks are not interested in refinancing the current condo-hotel loans they have on their books.
Condo hotel mortgages are non-QM mortgage loans that do not conform to Fannie Mae or Freddie Mac guidelines. Portfolio lenders use their own funds to fund condo hotel mortgages. Once the loans fund, they either keep them in their portfolio or sell to institutional investors such as hedge funds, insurance companies, or money managers.
Non-QM Mortgage Brokers specialize in condo hotel financing. We cater to both condotel purchases as well as condotel refinance mortgage loans. The team at Non-QM Mortgage Brokers can help condo hotel unit owners nationwide who need condotel purchase and refinance loans.
Lenders For Condo Hotel Mortgages
Non-QM Mortgage Brokers are mortgage brokers licensed in 48 states including Washington, DC, and Puerto Rico. We have multiple non-QM wholesale lenders who are specialist in condo hotel mortgages.
Prices for condo hotel units vary from under $100,000 to over a million dollars plus oceanfront units. You can find studio condotel units in Daytona Beach, Florida for $50,000 close by the beach. Or you can find a $1.5 million dollar two bedroom, two bathroom oceanfront condotel unit in Hawaii.
Every lender has its own lending requirements on condotel financing. But in general, the general consensus among condotel mortgage wholesale lenders is the condo-hotel unit needs to be at least 500 square feet. The condominium needs to have at least one bedroom and a functional kitchen.
Condotel Financing Guidelines
The Condo Hotel Complex needs to have sufficient reserves and cannot have any pending litigation. The Complex cannot have major pending building violations or be in bankruptcy or a pending bankruptcy. The condotel unit own needs to put a 25% down payment on purchases.
There is no one single lending guideline for condo hotel mortgages. Each non-QM lender has their own guidelines on condotel financing. Non-QM portfolio lenders can make exceptions to condo hotel mortgages on a case by case basis.
Condotel unit owners need to have 75% LTV on refinances for owner-occupied and second homes. 30% down payment on purchases and 60% LTV on refinances on investment condotels. If a borrower has a primary residence and another investment home, any purchases thereafter are considered investment homes so investment condo hotel financing requirements will apply.
Why Is Appraisal Research Needed On Refinance Condo Hotel Financing?
This way, if the appraisal comes in lower than your anticipated value, condotel unit owners can either consider contesting the appraisal or paying down the loan balance if they do not meet the LTV Requirements. An appraisal can be contested if there are comparable units that are similar to the subject unit. Appraisal Rebuttals are difficult.
Condotel mortgage lenders want a full appraisal with comparable sales in the condotel complex. If there are no recent comparable sales in the condotel complex, many condo hotel lenders may require two independent appraisals.
In the event, if the appraisal comes in lower than the anticipated estimate, the only way the condo-hotel refinance loan will go through is by paying down the condotel mortgage balance so it falls within the 75% LTV on primary/secondary homes, and 60% LTV on investment homes. Condotel appraisals are arbitrary and there is no set formula on the value it will come in. Recent comparable sales are the only way to win appraisal rebuttals. However, with no comparable sales, whatever the appraised value is will be what the value lenders will go by. Condo Hotel Financing is a 30-year adjustable-rate mortgage: 3/1, 5/1. 7/1 ARM.
Realtors Specializing in Condotels
I would consult with realtors who specialize in condo hotels in your area to find out what comparable condotel units are selling for and what they have recently sold for.
Non-QM Mortgage Brokers are mortgage brokers licensed in 48 states including DC, and Puerto Rico. We have a lending network of over 210 wholesale lenders including many investors for condo hotel mortgages.
If you are interested in a condotel purchase loan or a condotel refinance mortgage loan please contact us at Non-QM Mortgage Brokers at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com or visit us at www.non-qmmortgagebrokers.com.