Are banks and mortgage underwriters feeling different about condo high-rises along the shore?
Yes, says Paul Zgalich from Guaranteed Rate. He’s the Senior Vice President of Mortgage Lending.
Last year in Florida where a high-rise condo collapsed, they determined that one of the likely causes was deferred maintenance.
That’s why as lenders, we verify:
- Condo in good standing
- Maintenance up-to-date and code
- No litigation against condo board or HOA, Homeowners Association.
- Reserve budget in good standing. Can cover most unexpected expenses.
Jersey Shore condos mortgages can be very tricky.Paul Zgalich from Guaranteed Rate
The rise of non-warrantable condos. They don’t meet Fannie Mae and Freddie Mac’s guidelines. Each condo has specific approval process and how Fannie Mae and Freddie Mac looks at that.
Margate, Ventnor and Brigantine are still fairly healthy? Definitely very healthy, but unfortunately, I see no increase in inventory, says Sherri Lilienfeld of Apex Prime Realty.
I thought the end of the summer, we would see people putting their houses on the market, but actually the inventory levels been pretty stable. Pricing has been stable, too.
Why isn’t there more houses on the market now? Maybe people don’t want to pay a higher interest rate when they have to go and buy another home? ‘That’s very likely’ says Zgalich.
Downbeach snowbirds. In the off-season, many from Margate, Ventnor, Longport and Brigantine head to Florida seeking warmth. This year, they will face the devastation of Hurricane Ian.
Zgalich: Hurricane Ian will negatively affect the insurance market. For example, I was trying to renew my flood insurance in Brigantine. Insurance companies are on a standby or freeze right now. Waiting to see damage report from Florida.
Flood insurance is a FEMA issued policy. You can also do lending through private insurance companies.
Private insurance companies can run out of funds. Especially during a hurricane.
House on a high elevation? You may still have trouble getting flood insurance.
No mortgage? flood insurance is recommended but not mandatory.
Hurricanes have major impact on insurance policies. I couldn’t write a New Jersey shore loan after Hurricane Sandy.
The real estate market is more than just the price of a home. Consider everything, including:
- Home & flood insurance
- Mortgage rates
- Higher taxes
- Condo fees
- Potential assessments
After Hurricane Sandy, the first question people ask: what’s house elevation and cost of flood insurance?
In some cases, you can obtain the seller’s current flood policy. The policy they’ve received years ago is going to be much better than the current policy that you would get today.