Thursday, July 28, 2011

Have You Considered A 203K Rehab Home?

There are mortgages available specifically to buy and fix a home. These definitely should be considered if a home is in good condition, but does not meet your goals, i.e. out dated kitchen, flooring, issues with roof, etc. This program allows you to both purchase and repair a home with a single transaction.

In addition to a typical home improvement project for this type of loan package, the 203-k mortgage loan program can be used to convert a one-family dwelling to a multi-family dwelling; perfect if you need to move the in-laws in with you.

You're probably more acquainted with mortgage financing plans that provide permanent financing. That is you pay your closing fees, sign for a home, and deal with the lender on a monthly basis, when you pay your mortgage. The significance of a 203K loan allows the buyer to roll in the costs of repairs to rehabilitate the property into the mortgage loan.

When rehabilitation is involved, the lender requires the home improvements to be finished before the long-term mortgage is made. You really sit down at closing to sign off on 2 loans; a temporary one for construction/rehabbing of the property, then your 15 or 30 year mortgage after all improvements have been completed.

There are 2 FHA 203k loans; the FHA 203k Rehab and the FHA 203k

Streamline. The FHA 203k Rehab enables borrowers to obtain a single mortgage to finance the purchase and the rehabilitation costs of the property. Minimum improvements are $5,000.

The 203k Streamline key points; this loan has many of the same attributes of the 203k Rehab loan, except the Streamline loan has no minimum amount tagged onto repairs. The maximum amount of repairs is limited to $35,000 for major remodeling.

The 203k loan takes an average of 45 days to close; 30 days for minor remodeling projects and 60 days for projects involving major structure remodeling.

The qualification requirements are the same as a typical FHA mortgage loan however, you all need to submit a home project plan and budget for the improvements. The only additional item that the borrower needs is enough cash reserved to pay for materials and labor until they are reimbursed through the loan.

With an over-abundance of foreclosed properties that need rehabilitation, the 203K loan package is a perfect opportunity to get more house for less price (as-is market value) and be able to make improvements without borrowing from your personal savings.

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Saturday, July 23, 2011

Fixer Upper Financing? How To Finance A Distressed Property Or Foreclosure

Location, location, location...words many of us have heard from our parents growing up. This could not be more true when purchasing a new home. Location and potential in the home you are buying are very important. We have found that many home buyers today are finding a great location, but the house itself needs a little work.

With an increase of Foreclosures and or Short Sale or Bank Owned homes on the market today, buyers are finding that the seller's or sometimes the bank who owns the home is not in a position or refuses to make necessary repairs for traditional financing. Let's say you have your down payment saved, or have received a gifted down payment and you begin to shop for a home. You narrow it down and make an offer which is accepted right away! Your Realtor calls your Mortgage Consultant to make sure that the property in it's current condition (you are getting a good deal and know you can fix it up yourself later) come to find out there is no way that you can close with traditional financing on the home in it's current state. This can be the case when a buyer is approved for FHA, VA, USDA or Conventional financing. Do you need to walk away and find something that might not be in the right location, on the right lot, or in the right school district? No, enter the FHA 203k Streamline option.

Did you know that with an FHA 203k Streamline loan you can finance the items (check for qualifying repairs) to turn your fixer into your beautiful new home with one loan, one closing, and no second mortgage?

Here are the general criteria for qualify:

May be used to purchase or refinance (1-4 unit single family)
Can be used to update a home, correct health and safety issues

Rehabilitate up to $35,000 items can include:
o Repair/replacement of roofs, gutters & downspouts
o Repair/replacement/upgrade of existing heating, ventilation & air conditioning
o Repair/replacement of plumbing & electrical systems
o Repair/replacement of flooring
o Minor remodeling that does not involve structural repairs
o Weatherization, including storm windows & doors, insulation and weather stripping
o Purchase & installation of appliances, including free-standing.
o Improvements for accessibility for persons with disabilities.
o Lead-based paint stabilization or abatement of lead-based paint hazards
o Repair/replacement/addition of exterior decks, patios & porches.
o Basement finishing & remodeling that does not involve structural repairs
o Basement waterproofing
o Replacement of windows, doors, and exterior wall re-siding.
o Well/septic repair
o Pool repair for health and safety only, such as an empty pool on a foreclosure sale.

A few questions you may have:

Can this program be used when making an offer on a Foreclosure or Bank Owned home?
Yes! This is ideal for a home in need of repairs that the seller or bank will not make.

Does this program allow me to buy a "HUD" home and finance my repairs?
Yes, it does. Talk to your Mortgage Consultant for more information.

Can I use this program with a refinance if I already own the home and it needs repairs?
Yes you can, as long as you are not taking any cash out and financing the rehab costs up to $35,000

How do I get started?

Contact your Mortgage Consultant today for more information on how to qualify for this loan and a referral to a FHA 203k Expert Realtor.

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Want more info on how you can get a 203k loan? Call Mike Young, the 203k expert!

Wednesday, July 20, 2011

Ready To Rock Or Ready To Reno-HGTV

Sylvia and Paul debate between a fixer-upper and a move-in-ready house. This video is part of My First Place show hosted by Narration Only .

Saturday, July 16, 2011

FHA 203k - 5 Tips To Make Your New Roof Last Longer

Whether it's home improvements or house repairs or full-on rehabilitation, the FHA 203k is a great option. The mortgage loan option covers new purchases OR refinancing. Let's take a quick look at what the FHA 203k is:

A home buyer can finance a house and many repairs, renovations or improvements right into the monthly payments, amortizing the work over the life of that home mortgage loan. The great thing is that with interest rates where they are right now, it will only add about $6 a month for every $1,000 in repairs or renovations you finance. That means a $10,000 roof will only add about $60 a month to the house payment. Then, when you decide to sell, that cost stays with the house.

Some of the work covered by the FHA 203k (Full or Streamline) includes these projects:

  • New roof
  • New deck
  • Waterproofing the basement
  • New windows
  • New kitchen
  • Interior paint, wallpaper and flooring
  • Several other projects

Let's get back the project of a roof. Whether it's simply replacing old shingles with new ones, or tearing apart the entire roof, wood and all, you'll want to make sure you get the most money out this new roof. After all, you wouldn't want to go through all the trouble again in 5 or 10 years. So here's a look at a few maintenance steps you can take every season to make that roof last longer after the FHA 203k work is done.

1. Keep the roof clean. Keep twigs, leaves and other debris off the roof. Be especially vigilant after a storm. Make sure no branches fell on the roof from surrounding trees. As these wither, they can damage the integrity of the shingles and wood underneath.

2. Clean your gutters. You can get out the ol' ladder in the spring and fall or find a gutter topping to keep stuff out. Either way, keeping those gutters clear and flowing will make sure no water gets backed up into your roof. Water in your gutters can make them heavy and rip them off your roof. It can also lead to leaks in your walls and water in the basement. I've even seen some houses with so much junk in the gutters, it looks like they're growing trees!

3. Speaking of trees... Trim them! This goes along with the previous tips. Keeping the trees trimmed will help keep the roof and gutters clean.

4. Get rid of the moss. Keep your roof dry and moss-free to help make sure the shingles and wood underneath stay good for a long time. A little bleach and water mixture usually helps get rid of the moss, or call a professional if it won't come clean

5. Where it snows - prevent ice dams. Preventing ice dams begins with keeping the gutters clean. When snow melts and has no where to go because your gutters are clogged, it build up, re-freezes and creates ice dams. So it goes back to keeping the gutters clean. Another way to help is to get a snow rake for the roof and keep the snow build-up to a minimum. You can also find snow melt cables that heat up and keep the snow and ice from building up (we do not endorse these products, because we're not part of the inspection team or safety crew that makes sure they won't catch anything on fire - but they sure look cool!).

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Wednesday, July 13, 2011

Red Flags Of The FHA 203k Renovation Loan

Fixer-upper homes, foreclosures, short-sales and REO properties have flooded many housing markets across the country. This can be a great thing for home buyers looking for good deals. Unfortunately it also means a lot of housing stock is in need of some TLC. From simple upgrades and improvements to renovations and repairs, many homes need work. Fortunately there's a mortgage loan program that takes aim squarely at these less-than-desirable houses, and turns them into dream homes!

You may have never heard of the loan program backed by the Department of Housing and Urban Development (HUD) called the FHA 203k loan. The 203k hasn't seen much press since its inception in the late 1970's. Since then, lenders have been able to partner with state and local housing agencies, as well as nonprofit organizations to rehabilitate properties. Despite this great move, the 203k remains largely in the shadows. Some of the reason would be a stigma attached to the FHA 203k that it's a difficult loan to deal with. But that doesn't have to be the case. The Standard 203k from the 70's can have issues with difficulty or timing, but an experienced mortgage advisor should be well-equipped to handle this loan program.

Also, the 203k Streamline was added to the program a few years ago. Now home buyers have another option to finance home improvements, repairs, renovations, or rehabilitation.The basic difference between the Full and Streamline loans is the money you can roll into the mortgage (the Streamline covers up to $35,000) and the kind of work that's covered (the Full will cover structural repairs). So whether it's new paint, carpet, siding, appliances or windows that you want to replace, or it's something that you need to replace because it's a structural issue, the FHA 203k can help by rolling the cost into the mortgage.

FHA 203k Red Flags

The unfortunate thing about the 203k is that many people either haven't heard about it, or they've heard the loan program is bad. Let's take time to dispel the rumors and negativity about this mortgage loan.

Closing times are too long. Quite often the problem with the FHA 203k loan program is that those involved may not have a grasp on all of the inner workings of it. This starts at the top: your mortgage consultant should be a 203k Specialist. This person should work with other professionals who are well-versed in the loan and the work it takes. While getting the loan set up and closed could take a little longer than another program, it generally should not take more than a week or two longer. Getting the bids in on the work is often what adds to the process, which is why contractors need to know about the 203k. It's also why we work hard to offer continuing education to real estate professionals in our service areas. The more people educated about the program, the more powerful would-be borrowers we will have.
  • Bids, contractors, draws - it's just too complicated.. The 203k definitely has a of working parts. Working with your lender, a real estate agent and the contractors can be a huge undertaking. One way to take care of the stress is to work with a lender who's a 203k Specialist. A mortgage consultant should have a trusted network they work with to help get the job done efficiently.
  • Instant equity is a myth. Actually, the 203k can take the place of the old home equity loan. Whether it's a purchase or a refinance, the future value of the home after the improvements or repairs gets factored in, creating instant equity. Let's look at the number: a home for sale for $80,000 in an area with homes valued at $140,000 might need $40,000 in upgrades or repairs. That means a mortgage loan of $120,000 for the house and the work. You now have $20,000 in instant equity.
  • It costs less money and less work to just rent. There are costs involved whether you rent or own your home. Whether it's lawn care or utilities, you will need to do the work yourself or pay for it if you own your home. A landlord might cover all of that if you're renting. However, the equity you will build and the freedom from a renter's nightmare outweigh those perks. Also, it's a buyers market right now with home values low and interest rates still hovering at near-record low levels.
The FHA 203k is designed to help turn neighborhoods around, and build up housing stock from run-down homes to livable, desirable dwellings. While cutting through the government red tape can be a hassle, arming yourself with knowledge can position you to be a powerful, educated consumer.

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If you're interested in a 203k loan let the 203k expert, Mike Young, help you! With many years of experience working with and training others in the 203k loan, he will be able to help you every step of the way.

Saturday, July 9, 2011

Become Part Of A 203k Team

I've always looked at the 203k as a team sport, even when I first got involved with it. When we put out our audio tapes in 1998 we even discussed it.

You are only as good as your 'team' in any case. If your consultant can't write a good report, the lender won't have much to work with and on the other hand if the lender can't get the loan closed it doesn't matter how good the 203k consultant writes the report.

This is true of the rest of the team as well. Your teams each should have a Lender that can close an FHA loan, even a 203b quickly.

Our trained 203k consultants will provide 100% of the 203k portion so the lenders can take our MMW and use it to help them fill out their form... it is their responsibility but we try to make it easier for them.

If we all do our part of the project and then pass the baton to the next team member this frees us up to get the next project started.

Example: A 203k loan may begin anywhere by any one of the team members. We quite often get calls from our websites or the HUD website from a borrower... we immediately asses the situation and more than likely we'll send them to a lender to get that process started.

They may already have a property, that is okay, we still need to get that lender take on the borrower to be sure they are credit worthy. Not wanting to waste time or the borrower's money we need to verify they have the ability to get the 203k loan going.

If they don't have a property then we suggest a realtor or agent to help them find one in a neighborhood of their choosing.

We may actually start consulting to determine what type property they might want. There are several possibilities in this realm.

Once they locate a property suitable for their needs we set up a 203k consultation and inspect the property to create the 203k bid specifications.

Once those 203k specs are complete the borrower should look them over to be sure everything looks like they want it. Then they go to the lender.

The lender takes the 203k specs and provides that information to the appraiser and the appraisal is completed with an 'after improved' value. Once we reach this point the loan should close within a week or so typically.

Once the loan closes the borrower needs to get that information to the contractor so they can get that project in their schedule.

This is an important step as this is the only way the contractor has of learning the loan has closed.

They have up to 30 days to get their first draw inspection but in most cases they will have someone start long before that. In many cases they will start within a few days of your closing the loan.

We look forward to helping you build your 203k business.

Know that this is much more than just 203k, you will be trained in all renovation loan products that you can also consult on.

You will have access to our marketing materials and power point presentations to increase your "Referral Partner" Base too.

We have referral partners that provide a considerable amount of work for us in the FHA 203k loan program.

We'll show you a way to finance 80% of the pool repairs or even add a swimming pool to a home that doesn't have one.

To place an order go to 
Mike Young, 203k Consultant
Cell phone 1.704.451.1599

We now have offices in

Charlotte, NC
Columbia, SC
Charleston, SC
Denver, CO
Detroit, MI
New York, NY
Los Angeles, CA
Santa Barbara, CA
Austin, TX
Dallas, TX
And we are growing our business!

Tuesday, July 5, 2011

The FHA 203(k) Loan: A Home Repair Loan And Mortgage All In One

Amy Fontinelle, 06.18.10, 06:10 PM EDT

If you're looking at a fixer-upper, the Federal Housing Administration rehab loan may be the mortgage for you.

Are you interested in buying a fixer-upper, but don't have the cash to remodel it? Or maybe you have saved money for remodeling and you've found a house you love, but your lender won't allow you to buy it because the house isn't considered habitable without toilets.

There are always properties on the market that weren't maintained by cash-strapped former owners, were treated poorly by renters or were deliberately trashed by formers owners before they lost their home to foreclosure. Shouldn't there be a way for someone like you to fix up these neighborhood eyesores and bring them back to life?

A Gift From the Government
There is, and it's brought to you by the federal government. The Federal Housing Administration's rehab loan product, the FHA 203(k) loan, was designed for individuals who want to rehabilitate or repair a damaged home so they can live in it as their primary residence. These loans are endorsed by the government to encourage lenders to offer what would otherwise be considered a risky loan product. Because of the risk and expense involved, rehab projects are normally handled by professional real estate investors who can buy properties with cash and therefore don't need any bank to approve the property's condition.

This article will describe how much money you need to save up, the two different types of 203(k) loans, eligible properties, eligible repairs, how to apply and more--in short, what you need to know to determine whether this type of loan is right for you.

How Much Cash You Need
The FHA 203(k) loan lets you include the money needed for repairs and related expenses in the loan, such as materials and labor. If you wanted to buy a home in which the kitchen had been ripped out, you could include in the loan the price of new cabinets, counter tops, flooring, a fridge, stove, oven, microwave, sink, dishwasher, garbage disposal, and the cost to design, permit and install it all. The loan can also include a 10-20% contingency reserve for expenses above and beyond your repair estimates. You can also get up to six months' worth of mortgage payments included to cover the mortgage while you're renovating the home, so that you won't have to make a double housing payment.

As of early 2010, you only have to come up with 3.5% of the home's purchase price plus repair costs to buy a house with this type of loan. So if you were buying a house whose asking price was $150,000 and that needed repairs of $15,000, you would need 3.5% of $165,000, or $5,775, as your down payment. Of course, you'll also have to meet the usual borrower requirements for an FHA loan, like having a steady, verifiable income and a good credit score.

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