A loft does not always fall into the standard home loan category. Learn the ABCs of getting your dream loft funded at the best rate. Knowledge is power, and in this case, it is also worth money to you. #entarlovesyou
LA LOFT LOANS
When searching for the right lender, you must work with a loft savvy broker who knows the ins and outs of loft financing.
A. Loft financing is considered as non-traditional financing by Banks and credit unions.
…As a result, they scratch their heads at how to put a deal together. Lenders have strict rules that consider zoning and occupancy, like live/work, construction, when a GE plant turns into a loft community, and building style. Many lenders say that they will fund a loft with no problem, but they later change their mind when the underwriter checks the building several weeks later, causing delays, extra costs or failed transactions. So, while they would love to help you get a home loan, the factors that make a loft appealing for its industrial bones and exposed brick walls can make it unfit for bank financing. In addition, the mere existence of a homeowners association does not always make a loft community similar enough to a condominium to qualify for off-the-shelf funding.
When it comes to getting financing, lofts often have issues that traditional condos do not have, including: wrong zoning and building type — not listed as a residence, listed as industrial or commercial building; too much commercial business in the building, lawsuits and litigation, high renter ratio, inadequate HOA communication, missing flooring etc.
B. Understanding the Community Reinvestment Act can save you money.
Many lofts are located in these reinvestment areas. Federally insured lenders are required by the government to provide a required allotment of loans in these areas. In addition, the Community Reinvestment Act (CRA), enacted in 1977, requires the Federal Reserve and other federal banking regulators to encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighborhoods.
C. Hire your agent based on their experience in your target market.
Again it’s now what you know but who you know. Hire an agent
- Which buildings qualify for Mills Act tax breaks
- What buildings face budget and legal issues that lenders won’t touch.
- Identify lenders who have a track record of funding Loft buildings you are interested in buying into. #entarispowerful
#millsact Find your dream loft with a huge Mills Act property tax discount.
Have a dream and the faith that there are still ways that qualified borrowers can get a Loft mortgage with a small down payment. That is if you know who to ask for help. Be encouraged that it’s still quite possible to arrange loft financing on a tight down payment budget.
To recap the leading issue in loft purchases that regular banks don’t write loft loans and most seem to draw a blank when asked to help buyers finance a loft. In that situation, you will likely need to reach out to a specialty lender who has the confidence and experience in the loft market. Your agent should be a great resource. It is a case of not who you are but who your agent knows.
Here are some examples of regular home and Condo loans that will work for you in most cases. VA, FHA, Credit Unions.
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Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Realty Source Inc, DRE 01889449; MPR Funding Inc NMLS 2000513. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.
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