Its a brilliant Thursday morning here in Washington DC. As you may know if you read our blog, we’re in the processes of making an offer on an investment apartment. So for the past few days we’ve been emailing and calling lenders to get the right financing lined up.
The process has made one thing clear: its not 2005 anymore.
There have been drastic changes in how lending is handled in real estate since the boom a few years ago. For example:
1) No documentation loans are now illegal. You can’t just say you have a job and money. Now you have to prove it.
2) Lenders are far more stringent in doing due diligence. We’ve been asked for our full tax returns, evidence of employment and copies of all bank account statements for the past two months. This doesn’t sound like a lot, but its actually some work to get it all together in an electronic format suitable for emailing.
3) Fannie Mae and Freddie Mac have tightened lending standards. Specifically my wife and I are looking at getting an investment property, which means there tougher requirements mandated by Fannie and Freddie in terms of the owner/investor ratio for condo lending. Specifically, Fannie and Freddie won’t purchase loans for resale unless the loans are secured against properties in buildings with less than 51% owners.
4) All lenders want a big down payment. Zero down for investment properties in DC is officially dead.
Folks, if you are in DC condo market, feel free to leave a comment. We’d love to hear from you.