Thursday, June 30, 2011

FHA 203K Saves The Day

The FHA 203K program can save the day for, the buyer, seller and Realtor. This program, which is used to buy and repair houses has been marketed and discussed as a method to purchase distressed and foreclosed properties. However, this program can also be used to make small repairs and renovations to routine purchases and Long Island mortgages or mortgages throughout the country. This makes the home more desirable for the buyer, easier to sell for the Realtor and more marketable for the seller. First of all, let us discuss the details of the program.

Under the FHA 203K program, the minimum amount for repairs is $5,000. There is an streamline program available with no minimum and a maximum of $35,000. Here are some other aspects to this program:

o First Lien Position
o Owner Occupied
o As in any FHA program, there is an upfront mortgage insurance premium which can be financed
o Assumable
o Loan amount up to 110% of the after repair value

Here are some of the advantages:

o Renovation cost in tax deductible mortgage
rather than high cost credit cards or retail
installment loans.
o Can escrow payments while repairs
o Escrow funds in interest bearing account .for the benefit of the borrower
o Frees cash on hand for other investment
o Only one monthly payment.

203(k) Eligible Properties

- 1-4 Units
- Condos (interior only)
- Mixed Use Properties-yes you can use this program for mixed use
- Existing homes complete for over 1 year
- New Construction on part of original foundation

203(k) Necessary Improvements

- Health and safety repairs
- Corrections of code violations
- Correcting structural deficiencies
- Repairs necessary to meet HUD
property compliance
- Smoke Detectors

203(k) Repair Ideas

- Structural alterations and additions
- Remodeling kitchens and baths
- Changes to eliminate obsolescence and
reduce maintenance
- Modernize plumbing, heating, AC and
electrical systems
- Install or repair well or septic system
- Roofing, gutters, downspouts

Other 203(k) Improvements

- New free standing appliances
- Interior and exterior painting
- Flooring, carpeting and tile
- Swimming pool repairs
- Energy efficient improvements
- Other improvements that are a
permanent part of the real estate

Who Can Do Renovation?

An Experienced Contractor
- Lender should review and approve the
- Selected prior to loan closing
- Signed contracts in place
The Borrower is ineligible to do any work
(including painting) unless...
- The borrower is a general contractor by trade
- Cannot be paid labor, but still must escrow
for labor

Rehab Period

- The borrower has up to 6 months to
complete the work
- The rehab period should be realistic
- The Underwriter can grant an

Work Write Up Format

- Form completed by the consultant:
- Must be prepared in categorical manner
with 35 categories
- Must be detailed as to the work being
- Recommended that it be done "room by
room" as well as by category
- Should be a break down between labor and

Who Does the 203(k) Work Write Up?

- A HUD approved 203(k) Consultant
- 3 years experience as contractor or home
- State licensed architect or engineer
- Trained by HUD or accepted 203(k)
- Local to the area
- Anyone (including the contractor) knowledgeable
about construction or renovation but...If anyone other
than consultant is used, a Plan Reviewer is required to
ensure compliance with FHA requirements.

Interest on Escrow

o The rehabilitation escrow funds (including the contingency reserve, financed mortgage payments, etc.) are placed into an interest bearing escrow account and will not be used for any purpose other than the payment of rehabilitation costs associated with the 203(k) loan.

Permits/Cost Savings

o All required permits must be issued by the local or state building departments prior to the request of a draw disbursement.

o Draw Requests should only be for the actual cost of the rehabilitation. Any costs savings should be used to make further improvements to the property, pay for costs overruns on another line item or pay down the loan balance.

For realtors, this program is a great way to market properties. Suppose you have buyer who loves the house being shown except the current owner has all the wallpaper, carpeting and d├ęcor in some strange design that turns off the buyer. Instead of losing the sale, suggest the 203K program to make the necessary changes. In fact, any house can be marketed as a custom house because the buyer can use 203K program as a Long Island mortgage or anywhere in the country to make any changes to a house with no out of pocket expenses.

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Need a 203k Consultant? Order One Here
One of the largest 203k consultants in the nation with thousands of projects completed since 1994. While HUD doesn't guarantee the quality or warrant the work a consultant provides it is easy to see that experience is everything. You need to find a consultant that has a few projects under his belt and has stood the test of time. We qualify.

Tuesday, June 28, 2011

Evaluating FHA 203k Loans - Is It A Good Fit For You?

Distressed foreclosed homes are in abundance in today's nationwide real estate market. These properties can be purchased for as much as a 75% discount because there is substantial work that is needed to make the home functional and attractive to live in.

Let's assume you're a first time home buyer and researching lending options. You want to take advantage of the discounts available on banked owned foreclosure properties. You've also learned about the 203k rehabilitation loan available from the U.S. Department of Housing and Urban Development (HUD), but you're trying to determine if this is a good fit for you.

Here are some considerations to help you evaluate:

#1: Your FHA 203k loan amount will include the purchase price and repair costs (plus several other fees and a contingency fund for repairs). You'll need to qualify for that entire loan amount and will also need cash for a 3.5% down payment of the entire loan amount (not just the purchase price of the home).

#2: It is vital to consider the repair costs of a distressed home while evaluating your options. Sure the bank may be selling the home to you for $50,000 but it requires approximately $35,000 in repairs (and probably up to 10% more than that since estimates are rarely perfect). Add up the costs. Is this a better deal than purchasing another home that is nice and in move-in condition?

If you're going to use this loan program, be sure that you're able to get an outstanding deal and a home with immediate equity after the renovation is complete. Otherwise, you are likely better off purchasing a home that requires very little or no work.

#3: It takes time to have renovations completed - the larger and more complex the project, the more opportunity there is for delays. Things such as getting permits and inspections from the city can take considerable time. The great news about the FHA 203k loan is that you don't have to make loan payments for up to six months while this work is completed, however you need to ensure that you have the luxury of waiting to move in until the home is in livable condition.

Distressed foreclosure homes offer some of the best values in the real estate market today. If you believe the FHA 203k loan may be a good fit for you, be sure to speak to a mortgage broker or direct lender that has experience with these loans and get started!

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Saturday, June 25, 2011

Get Trained In 203K

When Mike Young took his first seminar from HUD on the 203k loan program it was evident to him that there was no real guidance for being a consultant. He was quick to seek out another consultant who had been doing a few projects and on day two of their meeting came up with some excel spreadsheet with the beginnings of the first software for 203k consultants he was to offer.

In 1995 the 203k was going strong and Mike hired a programmer to create his first 'dos' version of the software. Also in 1995 Mike had to hire and train about 15 consultants for his own business and went on the road teaching consultants around the country.

At one point there were three 'for profit' companies listed on the HUD website as official trainers for 203k consultants. Mike had trained the other two.

Mike traveled extensively for several years from Allentown PA to Orlando FL, to San Diego CA, to Seattle WA and many places inbetween.

In 1998 he had the first of his 'Windows' versions created and in 2010 was the biggest advancement to his software offering. We are about to have this years advancements released.

We train consultants, lenders, contractors, home inspectors, architects, engineers, handymen, and appraisers how to become 203k consultants.

There is plenty of work out there. Look here for more information!

Thursday, June 23, 2011

Tempting Foreclosure-HGTV

Will they risk the neglected foreclosure or go for a move-in ready option? This video is part of House Hunters show hosted by Narration Only .

Sunday, June 19, 2011

Choosing A Consultant Explanation

Ultimately your lender must approve the consultant.  We get quite a few loan leads and send them to the lenders who use us of coures. It insures some loyalty and it completes the circle. The borrower quite often doesn't pruchase a house every day so they need a consultant to guide them through the forest safely. That is about what we do for our clients.

We meet with the client and go over the paperwork pointing out a number of things that other borrowers have had difficulty with in the past. That saves the client from having to learn under fire. We believe as do our lenders that the best client is a well informed client who knows just what to expect and we all can enjoy the process together.

I recently had one of my lenders ask me to take over the 203k draws from another consultant only to be shocked that the contractor and borrower had no idea what was expected of them during the process. I merely stopped and went over the procedure with them so from there out they were informed. There are many consultants that fall short of "consulting" and that is a shame. It makes for an uncomfortable process for all involved. It is easier in the long run to take that time and go over the forms pointing out the fact that there will be a 10% hold back on each draw, they never read what they are signing so on the first draw taking over someone else's project just read to  them the paragraph before their signaure. Or, you can print out the "instruction" page of the draw request. The instructions are actually pretty good and save so much time when the borrower and contractor are on the same page with us.

The borrowers these days are so much better prepared than back in the 90's and quite often will do their homework and find a consultant. In that case we take them to a lender if they don't have one but it all starts with getting them pre qualified for the loan amount they are looking for. In a few cases they find the house and then the consultant, and then the lender. But in the overwhelming sceme of things the lender is the first step.

Monday, June 13, 2011

Why You Should You Use A Consultant On Streamlined "k"s ?

Simple answer is that you don't always know when it is a Streamlined "k" or a Full. We had a glazier buying a home... he felt that he could repair the broken windows so they had the contractor bid on the roof, carpeting, & new kitchen leaving off the broken windows. The appraiser called the broken windows tripping this into a Full 203k requiring a consultant. Had they merely mentioned this ahead of time this would have been a Streamlined "k".

Another one we just saw appeared to have structural issues but turned out that we were removing the garage which then left it a Streamlined "k". Had they wanted to repair the garage it was a Full 203k.

Having your consultant do the inspection on the property can let you know sooner that is one or the other, & in some cases save it as a Streamlined "k"

Friday, June 10, 2011

Are You A Contractor Looking For More Work?

Contractor's Guide now available

Contractors can actually get business within a few weeks and lots of it by using the techniques in this eBook.

Learn the secrets of getting more 203k work.

Most of it is paid 35-50% up front and the balance upon completion if you concentrate on the Streamlined (k) and if you want larger projects you will work the "Full 203k" program (sorry no upfront money on this one)

The last builders group we talked to was shocked to see just how much business was going on around them that they were totally unaware of. Check with me, Your copy may be FREE. This is an eBook. You must read while you have access to the internet in order to utilize all of the links in this one.

I am having so much fun telling contractors about this program. It is amazing to hear some of their stores of how slow they are right now and they are amazed at how fast they can access this program.

We need more qualified contractors in the program. If you are a contractor "anywhere in the USA" and need work we can show you how to find the right people who can let you start bidding right now.

We actually need good reliable contractors and the problem isn't getting the work, it is that the contractors we get need to be honest and tell us when they are getting too much work and back off the bidding process till they catch up. So many just don't want to turn any work away.

It doesn't do anyone any good if you can't perform. Therefore we ask that you take a break once you are booked out and let us know as you get ready for more work. We will help you stay busy but we ask that you cooperate with us in that regard and we'll keep the clients happier, as a TEAM we are more powerful.

Contact Mike Young 

Tuesday, June 7, 2011

Advantages Of Buying A Fixer Upper

If you have the time and determination to fix all the problems in a house, you get a few fantastic perks that you deserve. Not only are you fixing the house, but you are raising the equity and improving the value of homes in the area by bringing one home up to standards. Here are the most notable advantages to buying a fixer upper home:

Reduced price. Some homes go on the market for a lower price because the seller doesn't want to do the extra work. Instead of taking their own time putting money into it, they would rather just list it for less and let the next person take on the work. Because the property is in such poor condition, you can sometimes offer well below the current market value. These are especially good deals if you buy a beat up home in a very good neighborhood where homes tend to sell for more.

Choose your own look. Buying a home that's already fixed up is nice, but it will never look exactly the way you want it to unless you design it yourself, install your type of cabinets, sinks, bath tubs, flooring, etc. You can take out non bearing walls and not worry about destroying the paint job because you will want to paint them a shade that you prefer anyway.

Create your own equity. You can buy the house for less than market value, which is 's what it's worth because it needs so much work. The real advantage comes with every improvement you make, big and small. As you make the house look better, equity will begin to rise up to market value and depending on how much you fix it up, it can be in the upper range of home prices in that area.

Qualify for a renovation loan. There are some types of financing that you can get to make improvements on a home, such as an FHA 203K loan. There are more loans that you can get when funds become available from the government, or other programs. Usually, they are offered to improve neighborhoods and increase property value. For many of these types of loans, you must reside in the property to qualify. Talk with an experienced lender to find out what loans you can get.

The satisfaction of doing it yourself. Taking a house in poor condition and turning it into something impressive is quite a great accomplishment and something you can take pride in every day.

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