True or False: Condos on leased land cannot be financed.
In some areas like San Pedro, Palm Springs/Coachella Valley, Catalina Island for example, there are condos that are built on leased land. This means you own the condo but not the land.
Often it’s a company a family or an Indian tribe who owns the land and each owner pays a small or big fee for a specific time. Most of the time the lease is for 99 years, but the clock is always ticking.
We CAN provide financing as long as the time left on the lease is the same as the mortgage term PLUS 5 years.
So if you want a 30 year loan, we need the lease to expire no sooner than 35 years from now.
I just had a client who got turned down by a big bank for a loan because the lease was expiring in 28 years. So, I found a way to solve the problem. I made a loan for 23 years (yes we can do that) and that way we met the guidelines. The payment was only $80 more per month so he was very happy! Now he has a vacation home on Avalon!