Financials in Rossmoor

Rossmoor is a unique community with some special financial restrictions. When it comes to a condo the normal rules apply - you can use any lender and as long as you meet that lender's requirement you are all set. A co-op is a different ball game...

Up until January 2006 all buyers of co-ops had to pay cash. No loans were available. That is no longer the case. There is one lender that is approved for co-op loans in Rossmoor and they are National Cooperative Bank (NCB). Considering they are the only lender working on co-op loans they are still very competitive. There are special down payment requirements for co-op loans in the three HOAs that consist entirely of co-ops; 1st Walnut Creek, 2nd Walnut Creek and 8th Walnut Creek. All three require 30% down on a loan.

If you decide to pay cash for a co-op there are some additional restrictions. Cash co-op buyers must show that they have approximately 4 times the monthly dues in income each month. Keep in mind that they are looking at the entire monthly fee which includes the HOA dues plus property taxes. Cash buyers also have to show that they will have approximately $70,000 in liquid assets after the purchase of their home. They put these restrictions in place to protect the HOA from cash buyers that put all of their assets in to the purchase of the home and don't have remaining assets to keep up with their living expenses. Family members are allowed to sign a pledge saying they will help the buyer with the purchase if they don't meet these financial requirements.

If a buyer doesn't meet those requirements, a condo might be their best bet. There are no restrictions when you purchase a condo with cash and you can use a lender that might not require a large down payment of 30%.


Why Pre-Qualify for a Loan?

Pre-qualifying for a loan makes you an appealing buyer in the eyes of the seller. Pre-qualification approves you for up to a certain mortgage amount, even before you look at your first home. Once you do start looking, you won't waste time looking at homes you won't be qualified for-and you'll be in a strong position to make an offer as soon as you find something you like.

Selecting the best financing package available is as important as finding a home that meets your needs.

There are three factors to consider in determining how much you can afford:

Down payment
Most loans require a down payment between 10 and 20 percent of the home price. If you are able to make a down payment of 25 percent or more, you may qualify for special mortgage programs offered by a variety of lenders.

Ability to qualify for a mortgage
Most lenders require that your monthly mortgage payment, including principal, interest, taxes and insurance, should not exceed 28 percent of your gross monthly income. They also expect your total installment debt (regular scheduled payments of 6 months or longer debt-car loans, credit card balances, etc.), including the proposed monthly mortgage payment on your new loan, not to exceed 36 percent of your gross monthly income.

In addition to your gross monthly income, lenders review your employment history, stability, and potential for increasing your income. They also evaluate any additional income, such as bonuses,
commissions and child support.

They will request a credit report to verify your debt repayment, outstanding debt, and available credit. They will calculate your assets, including checking and savings account balances, CDs, stocks and bonds.

Avoiding any late payments on credit accounts, and limiting your credit purchases, helps keep your credit report in good standing. If you have items on your credit report that could negatively influence your ability to secure a mortgage, be prepared to explain each situation in writing. You should also consider delaying major purchases until after you've moved into your new home.

Closing costs
Closing costs typically range between 2 and 5 percent of your loan amount. These fees are due in cash at the time of closing, or, in some cases, can be included in the loan. Pre-qualification is always a good idea.

Taking the time to pre-qualify for a mortgage before you begin your home search will put you in a much better negotiating position: your pre-qualification assures the seller that the transaction will not be delayed while you secure financing.

If you would like to learn more about financing options immediately, please contact us.