Provincetown Real Estate Blog

24 Pleasant Street # 3

Provincetown, MA  02657

$259,000

Looking for a renovated free standing condo in the West-end on a quiet side street?  Look no further….this charming free standing studio with sleeping loft sets back off of Pleasant Street in a quiet area- yet steps to everything that makes Provincetown special!  Recently renovated with hardwood floors, new kitchen with granite counters, stainless steel dishwasher and a glass cook-top stove with built in convection oven.  Sparkling new bathroom with full tub as well.  Spiral stairs leads to a spacious sleeping loft- tall enough to stand up!  This light filled home has many windows filled with sunshine- including a panoramic window with Monument views!  This condo would make a terrific getaway or rental to produce summer rental income!  For more information, click this link to see additional photos and details.

As I mentioned in my Part 3 post, you could be fully pre-approved as a Buyer with no issues what “ so “ ever.   Believe or not, you are only half way to obtaining a mortgage- especially if you are buying a second home condo (rather than a free standing single family home)!   The condo and the condo association must also be approved by the lender (called Condo warranty).Because many foreclosures are condominiums and some condo associations actually went bankrupt themselves, lenders look very closely at the strength of the condo association in addition to the strength of the borrower.

What do lenders look at within an association?

Established condo- The condo association must be completely established or have at least 70% of the units sold and conveyed to new Buyers (if the association is newly formed).   The condominium documents (Declaration of Trust and Master Deed) must be complete, finalized and recorded at the local registry of deeds.   Lenders will review all condo documents to make sure that the documents comply with their guidelines .   While they are reviewing the condominium documents, they may also ask for a copy of the minutes from meetings which were held within the last year as they want to see if any major upcoming expenses were discussed.

Budget- The lender will review the latest approved budget.   Lenders need to see a line item labeled œreserves equal to 10% of the total annual budget.   For example, If the total budget for the year is $10,000. , then there must be a line item marked œReserves for $1,000.   The lender needs to see that money is being set aside for any unexpected future repairs.   Even though the association may have a reserve account with a healthy balance- it doesn™t matter.   They need to see that money is currently and automatically being set aside which demonstrates fiscal responsibility on the part of the association.   In addition, they may also ask to verify that the association has enough in the reserve account to cover insurance deductibles.

Rental office- Many motels here on Cape Cod were converted to condominiums throughout the last 20 years.   Many of these associations have kept a Rental Manager and a Rental office onsite.   The owners love this feature since they do not have to book and manage the rentals but any association operating with this onsite rental office will be rejected by the lender.   Currently, lenders call this type of property œCondotels.   Since this type of property is operated like a motel , it is a much higher risk of potential default because they know that the condos are investments (versus 2^nd homes). You are more than welcome to rent your condo on your own!   However, when there is an actually onsite office and/or Rental Manager mentioned within the condominium documents- it is a big red flag to lenders!

Insurance- Condo associations must have a Master Insurance Policy which will cover the common areas and the building.   The lender will review the Master Insurance Policy to be sure that there is adequate coverage should a disaster happen.   If there is not enough coverage, the association will be asked to increase the coverage.   Most master insurance policy™s will only cover the exterior of the building and the studs of the units.   The lender will ask you, the individual Buyer/unit owner, to purchase H06 insurance if the master policy does not cover from the œwalls in of the unit.   An H06 policy insures from the studs inward as well as liability and theft.   Be sure to discuss specifics with your trusted Insurance Agent to learn more details.

Square footage- Many lenders will not lend on a second home condo if the square footage is less than 500-600 square feet.   Maryann Taormina from Guaranteed Rate , however, does have several lenders that are fine with the smaller square footage condos so the financing is available.   Just be sure to question your lender to make sure there won™t be an issue if the condo is less than 500-600 square feet.

Commercial units- Be sure to learn whether there are any commercial units within the condo association you are buying into.   It is important to determine the percentage these commercial units own within the association.   If the percentage is higher than 20%, the condo may not be approved by the lender.

I am not a Mortgage expert and will not pretend to be a mortgage expert.   The information contained here in my blog are issues of which I have encounter and learned over time.   For more precise details of the mortgage qualification process, you need to consult with a reputable licensed Mortgage Representative who is knowledgeable about second home financing on Cape Cod.

Be sure to visit my website to view a small handful of properties available here in Provincetown, Truro, Wellfleet as well as the surrounding Cape Cod area.

Now that you have clean credit reports from the 3 major credit reporting agencies, your Mortgage Representative will now evaluate all of your financial data in order to determine how much you can qualify for to spend on a new 2^nd home purchase.   They must factor in some basic estimates on taxes, insurance and condo fees (if any) on the new purchase.Now you can begin to start looking at properties!   You should now have a clear mind knowing exactly what you can qualify for and how much your estimated expenses will be so you will know whether you should decrease or increase the amount you wish to spend depending on your own personal comfort level.   Obviously, you cannot spend more if you do not qualify.   This pre-approval process will also “open more doors” for you.   Sellers and their Seller Agents are well aware of the “mortgage meltdown”.   Thus, many Sellers and Seller Agents will not allow their property to be viewed by a Buyer unless the Buyer is pre-approved with a reputable local lender.   The Seller or the Seller™s Agent does not want to waste their time showing a property if the Buyer is not qualified and cannot get a mortgage.

Buying a second home here in Provincetown is a wonderful process and a dream to be able to enjoy the natural beauty of the Cape Cod National Seashore or stroll through the charming boutique stores along Commercial Street in Provincetown or dance an afternoon away in the sun at The Boatslip’s Tea-Dance.   Thus, it would also be a complete waste of your own time looking at properties if you cannot qualify to purchase a second home.   I never want to see anyone’s hopes raised up wanting this Cape Cod experience only to have it come crashing down to find out (after the fact) that you do not qualify under today’s tightened mortgage lending guidelines.

Buyers have said to me:   “Oh, I have terrific credit and make good money, so there won’t be a problem getting mortgage”.   However, sadly, many Buyer’s do not qualify once they have a complete understanding of mortgage lending for second homes under the new lending criteria in 2011.

Recently, a national news media outlet said an estimated 25% of mortgages were declined by mortgage lenders.   I am delighted to have Maryann Taormina as a reputable local Mortgage Representative for Guaranteed Rate in “my corner”.   Due to her close attention to details prior to a loan being submitted for final approval, less than 1% (if any) of her mortgage loans are declined in the final approval/underwriting process!!   That makes my Buyers extremely comfortable having such a knowledgeable person working with them to a successful closing !   If you are even remotely thinking about buying a second home here on Cape Cod, be sure to contact Maryann first at 508-237-1424 or by e-mail at marytee@guaranteedrate.com.

In my next blog post, I am going to explain how you, as a Buyer, can be fully pre-approved.   But, the second home condo you wish to purchase may not be approved by lender.   I’ll go into what I, as a Buyer Agent, will be looking for in regards to condos on your behalf.

Be sure to visit my website to view a sample of properties for sale along with many pages of other valuable information regarding real estate here on Cape Cod.

Cape Cod is absolutely beautiful!!   Especially in and around Provincetown, Truro, Wellfleet, we have that œCape Cod Charm like no other place!!   As such, people have a very high desire to purchase a second home/condo here.As I mentioned in Part 1, obtaining financing on a second home here in Provincetown is a bit tricky.   However, it can certainly be done especially if you are prepared- so you will be able to start enjoying your special piece of paradise!

Now that you have an up-to-date, accurate credit report and all of your financial statements in the hands of your Mortgage Representative, you are wondering œOK, now what?

The very first question the Mortgage Representative will ask is œhow much liquid cash do you have to be used for a down payment?   For a second home mortgage, you will be looking at a minimum of 20% down (could be a little less depending on your complete financial profile).   However, it is best to be prepared to put 25% down.   If you put 25% down, this will allow you to get a lower rate and/or better terms than if you put down only 20%.   If you are applying for a second home jumbo mortgage (loan amount higher than $417,000), a minimum of 25% or more may be an absolute requirement.

The Mortgage Representative will review your FICO score. More than likely, the lender will use the middle FICO score of all 3 credit reporting Agencies.   To qualify for the best rates and terms, the middle FICO score should be higher than 740.   If your score is less than 640, mortgage financing for a second home is not available from most lenders.   The Mortgage Representative will review the tiers of credit scores for various loan products based on your overall financial profile.

The next vital important calculation is your debt to income ratio.   In most cases, the maximum debt to income ratio allowed is 50% for all debts.   The new home purchase (including taxes, condo fees, insurance) you are considering is factored into this ratio along with your primary residential housing expenses and all installment & revolving debt.   In the end with the new second home mortgage, your total monthly debt should not exceed 50% of your monthly gross income as documented on tax returns and recent paystubs.   Some lenders, depending on your overall financial profile, may have a tighter 45% or less debt to income ratio limit.   Keep in mind, monthly debt includes all credit cards, all car loans, all current mortgage(s) including taxes, insurance and condo fees, car loans, student loans, child support, etc.

The Mortgage Representative will review all of your asset statements to verify the liquid cash which you will be using for your down payment.   Lenders want to see that all the funds are in your name in your account(s). It is best if the funds are œseasoned, meaning they have been clearly in your account for the last 3 statement cycles.   If the source of the down payment is not œseasoned, the lender will want to see absolute proof of where the funds will be coming from (must be an asset source in your name).

Did you receive a very nice cash gift from a rich Uncle for your birthday within the last couple of months?   That is terrific!!   However, lenders do need to source any deposits over $1,000 (outside of your normal documented taxable income).   If you received $1,000 from your rich Uncle and you deposited it into your checking or savings, you will be required to provide some sort proof of where you got the money from.   The reason lenders require this is because they need to know for sure that you did not borrow the money which would be considered an undisclosed debt.

OK, let™s review what I have covered so far in my first blog post and this post about a few of the requirements in order to obtain a second home mortgage:

Down payment- Proof of œseasoned funds in your name totaling a bare minimum of 20% of the purchase price.   However, be fully prepared to put down up to 25% if needed.

Credit reports- Accurate credit reports from the 3 credit reporting agencies with a mid FICO score of higher than 740 to obtain the best rate and terms.   You may run into serious trouble obtaining a second home mortgage if your average FICO score is below 640.   Visit FICO score website for more details about the FICO score, how to improve the score or how you could lower your score without knowing it!

Debt to income ratio- Your debt to income ratio should not be higher than 50%.   45% or lower is a better ratio to work within.   If you are right at 50%, there is NO room for any errors!

Large deposits- Absolute clear proof of any large deposits over $1,000 outside of your normal documented taxable income.

As I stated in my earlier post for full disclosure, I am NOT a Mortgage Representative or a mortgage expert.   A reputable, licensed Mortgage Representative will give you more detailed advice based on your financial profile.

My goal as a Trusted Real Estate Adviser, is provide basic information to my Clients to help make the lending process a little easier to understand and to help you be prepared.

If you do not have a Mortgage Representative to speak with who has closed many second home mortgages here on Cape Cod, the Mortgage Rep my Buyers work with is Maryann Taormina of Guaranteed Rate.   Maryann can be reached at 508-237-1424.

If you are enjoying reading this blog, please sign up to the right of this page to enter you e-mail address to be updated on new posts.   I would enjoy having regular readers and feedback!

Be sure to visit my website for a quick peak at properties for sale in Provincetown as well as much more information on a variety of real estate topics.

Prior to actually going out viewing properties, you will need to obtain a pre-approval from a local lender.   This is for your best interest before you take the time and energy to find a property, fall in love with it, then to only find out there was a tiny glitch in the mortgage process to prevent you from obtaining your dream second home.   In many cases, Sellers are demanding that only pre-approved Buyers are allowed into their homes.

Unless you have been asleep for the last 5 years, you have heard or read about the “mortgage meltdown”.   Due to the “meltdown”, Fannie Mae/Freddie Mac as well as private mortgage insurers, mortgage investors and your local bank on the corner, have instituted much tighter guidelines when it comes to approving a mortgage.   Not only have the guidelines been tightened over the last 5 years- they continue to change very often!

As such, it has become much more difficult to finance a second home (especially a condo).   Thus the reason at the time of this writing 33% of real estate sales are cash sales.   However, the great news is obtaining financing can be done!   Which is why 67% of the sales are financed.

In the coming days and weeks, I am going to be blogging about several different areas on how you can be   in the best position if you are looking to buy a second home here in Provincetown or anywhere here on Cape Cod.   There are so many topics to be discussed, I cannot cover it all in this one post without looking like book.  

Full disclosure:   I am not a Mortgage Representative and I do not know the deep details of mortgage financing.   However, as a Trusted Real Estate Adviser to you, I want to share some of the information I have learned from various lenders.   Even if you refinanced or purchased a home in the last few years, I highly advise following my blog posts since many areas within mortgage lending has changed!

Your very first step is to organize all of your financial documents, which include but not limited to:   recent pay-stubs, last 2 years tax returns, credit card statements, mortgage statements, bank statements of your checking and savings, statements of any stocks/bonds and any statements of any other asset or income.   Be sure you have ALL PAGES…..even if it is a blank page!!   If you are computer literate, I would highly advise scanning all of these documents into various PDF files.   Name the PDF file a name which relates to the documents contained within the file for easy identification.

The next step is contact a Trusted Mortgage Representative who has recently financed properties here on Cape Cod.   I highly advise my Buyer Clients to use a local Representative as this person will know all our unique characteristics market here on Cape Cod- especially in Provincetown!   The Mortgage Representative I refer my Buyer Clients to is Maryann Taormina of Guaranteed Rate, her direct phone number is 508-237-1424.

Explain to Maryann (or the Mortgage Representative you know well and trust) that you wish to purchase a second home and would like to get pre-approved.   This will involve pulling your credit report and giving the Mortgage Representative all of your financial documents.

I would ask the Mortgage Rep for a copy of your credit report from all 3 major credit reporting agencies:   Experion, Trans-union and Equifax.   Be sure to go through the reports very carefully!   Even if the Mortgage Rep says everything looks fine and your credit is great, you need to be sure of the following:   be sure there are no credit grantors you do not recognize, be sure the balances owed on your debts are correct, be sure the monthly payments are correct, be sure any accounts which you closed out are reported as closed on your credit report.

If there are any errors, you may file a report with the credit reporting agency advising them of the reporting error.   In most cases, this can be done online on the individual credit reporting agency website.   In most cases, errors are corrected within 30 calendar days.

This step is vital, cannot be overlooked or minimized.

Now you have some homework to do!   Follow my blog and be sure to check back often.   I will be posting more vital information in the very near future.

Want to take a peek at some properties online while you are doing your homework?   Visit my website to see a small handful of properties for sale.   Meanwhile, feel free to phone me at 508-237-4632 for more information.

15 Conant Street # 3
Provincetown, MA   02657

$349,000

In a prime West-end location in Provincetown, you find this completely renovated one bedroom free standing condo. The renovation was completed in 2009. The main level boast of a bright and open living/dining/kitchen area with wood floors and many sun-filled windows. Also, a spacious half bath is located off of the kitchen area. No need to go to the laundromat- a stack washer/dryer is included. The second level features an open bedroom with wood floors. The beautiful master bath has radiant heated floors and a very spacious stone shower. A private outdoor area with an outdoor shower and parking for one car makes this condo worth serious consideration for a year-round residence or for terrific summer rental income!

For more information about properties for sale in Provincetown, click here to visit my website!

39 Bradford Street # 3
Provincetown, MA   02657

$319,000

Do NOT miss this fantastic opportunity to own in a prime west end location at a great price! This gorgeous, top floor, private two bedroom condo with a modern flair has 556 square feet and boasts all new hardwood floors, freshly painted, new granite counter top and stunning kitchen cabinetry as well as stainless steel appliances. The bathroom is equipped with tasteful tile floors and tiled shower. An added bonus is a stack washer/dryer in the unit. A very sunny exclusive use deck is great for a cook-out with friends! Low condo fee of $167/month includes insurance, water, cooking propane and heat! Parking for one car, pets for owners allowed and connected to town sewer.

For more information about properties for sale in Provincetown, click here to visit my website!

Since Provincetown and Cape Cod consists of mainly second home Buyers, I thought this article would be terrific to post!

Buy Vacation Home in Haste, Regret at Leisure

With vacation home purchases on the upswing, here are some things that potential buyers should ask themselves:

¢ What are the maintenance costs? They™ll have to pay them even when they are not there.

¢ Does the weather drive up insurance and other costs?

¢ How popular is the area? Will hoards of people make coming and going difficult?

¢ Is getting there no fun? Some isolated places are really beautiful, but the airport is a long way.

¢ Will all the grandchildren or other welcome visitors fit? Or is this vacation home just too small?

¢ Can it be rented? If an owner needs to reduce costs, is there a market?

¢ Do they really want to go there every weekend?

Source: The Wall Street Journal, Sushil Cheema (03/29/2010)

This is just a sample of things to consider.  If you are thinking about buying a second home here in Provincetown, Truro, Wellfleet, or any of the surrounding Cape Cod communities, please visit my website to see a small sample of properties available.