Friday, October 28, 2011

203K Eligible Improvements

There is a minimum requirement of $5,000 in eligible (necessary) improvements on the subject property. Improvements to a detached garage, a new detached garage, or the addition of an attached unit (if allowed by local zoning ordinances) can also be included in this first $5,000. * The look a likes have no minimum amount of rehab. ** Read this carefully - this minimum has been removed... there is no minimum amount of rehab now...2008

The mortgage must include one or more of the items listed below:

  • Structural repairs and alterations.
  • Items such as additions to the structure; repairing any and all structural damage.
  • Improvement in the functionality or modernization.
  • Such items as remodeled kitchens and bathrooms.
  • Changes for aesthetic appeal, and the elimination of obsolescence.
  • New exterior siding and new doors.
  • Repair of replacement of plumbing, heating, air conditioning or electrical system. Installation of new plumbing fixtures are acceptable, including interior whirlpool bathtubs.
  • Installation of Well and/or Septic System.
  • Must be installed or repaired prior to beginning any other repairs to the property. Properties less than one acre in size can be limited on this item.
  • Replacement of flooring, carpeting or tiling.
  • Energy conservation improvement.
  • New dual pane windows and doors, storm windows, insulation, and solar domestic hot water systems.
  • Major landscape work and site improvement.
  • Patios and terraces that improve the value of the property equal to the cost, or that are needed to preserve the property from erosion.
  • Improvements for easier accessibility to the handicapped.
  • Handicapped retrofitting can be included in the cost of rehab. This is particularly good to get this information into the hands of vocational rehab companies and companies that deal with disabilities. They may have a list of clients for you.
  • The following items can be included in addition to the minimum $5,000 requirements:
  • New cooking ranges, refrigerators and other stand alone appliances.
  • Painting and other cosmetic repairs.
  • Fencing, new walks and driveways, and general landscape work trees, shrubs or seeding).
  • Repair of an existing swimming pool, up to $1,500. Any costs exceeding $1,500 must be paid into the Contingency Reserve by the borrower.
Items that will not become a permanent part of the property are not eligible. Luxury items are not eligible. These items include, but are not limited to New swimming pools, exterior hot tubs, saunas, spas, tennis courts, and barbecue pits.

Tuesday, October 25, 2011

Energy Efficient Mortgage And The 203K

The Energy Efficient Mortgage (EEM) was set up in 1993 to Green UP the nation's housing stock. We must be more responsible for conserving our natural resources. Being more energy conscious is a MUST. Everyone wants to upgrade their windows to "dual pane" windows... they look nice and modernize the LOOK of the home but are they an effective means of spending your money on a rehab project? NO is the short answer. In most cases they make the home more aesthetically appealing and may make it sell faster but for being a prudent way to spend your money for a ROI (return on investment) it's just NOT there.

How should you go about KNOWING where to put your money for the PAYBACK you are really looking for? That is easy... get a HERS inspection. HERS = Home Energy Rating System. This is a comprehensive report that assesses the energy usage and loss and will provide information that will show you exactly what you should spend your money on to save you the most money in the shortest possible time and really make a difference in your energy usage and the money you pay for that energy. In most cases under floor and attic insulation are much more effective than dual pane windows. Every home inspection course I've ever taken has indicated that dual pane windows are one of the worst investments with regards to PAYBACK that you can make yet you might consider sealed triple-pane windows as an alternative. Now this is not to say you shouldn't use dual pane windows if you have an extensive rehab project. Just realize that it is the perception rather than the energy efficiency that you are using them.

Piggyback the EEM on top of the 203k. Instead of just "rehabbing a home" get a HERS report and be sure to rehab your home in the most efficient manner to maximize your savings. Wow, that is profound.

Saturday, October 22, 2011

How To Become A 203k Consultant - HUD

If you are wondering what you could do to enhance your existing home inspection or contracting business or start one from scratch, this may be just what the doctor ordered.

Home Inspectors, contractors, and architects are already there. You already have the knowledge base in your arsenal.

We fill in the gaps by offering you 203k consultant training. You may have the construction background to qualify even if you don't have one of these credentials.

Our 203k training package takes you to the next level. We have trained hundreds of 203k consultants nationally since 1995 and continue to do so today.

We not only teach you about the 203k loan program but "how to" conduct the 203k consultation.

We show you how to make the bid specifications so all the contractors who may bid on your project are bidding apples to apples.

A poorly written specification results in a lot of headaches during the process. While a well written specification takes the drudgery out of it and makes it easy to provide the draw inspections.

We have completed thousands of projects and our software for consultants is designed to keep you and your lender out of trouble.

The contracts we provide are HUD recommended and come as part of our 203k software or 203k consulting software, whichever you may choose to call it.

We typically call it 203k software as we have designed it to handle several other similar products as well. If you are doing a Home Style loan by FannieMae you just click on a button and all the forms will be populated with their name instead of 203k pertinent data.

Similarly Wells Fargo has their own rehab program, just a click of a button and your forms are populated with their information.

In addition Wells Fargo & Bank of America have a couple forms unique to them which are added this same easy way... just a click and you have it.

203k Lenders will love that you use our 203k software and have take our 203k training as our software will provide the lender with 100% of everything they need to add to their 203b paperwork to make it a 203k.

This includes a MMW (Maximum Mortgage Worksheet). While the MMW is a form that is required for the lender to fill out, all they have to do it take your numbers and insert them on their form and it is done for them.

If you have a lender who takes our "203k training" we will extend your 203k consulting software to them as well and unlock it on your behalf so they can take the file electronically and then they can adjust the numbers if needed before they print the MMW for themselves.

We enjoy assisting you as you take off on this 203k journey and are happy to take your emails and answer any questions that we can to help make your business more profitable and enjoyable for you.

You can always reach us at money

Wednesday, October 19, 2011

How to Buy a Fixer-Upper

Are fixer-uppers a good deal? If you buy them right, fixer-uppers can be a great deal. Foreclosures have escalated to historical highs, and selling these homes presents new challenges. In years past a seller would market their home based on the condition of the home and comparatives in the neighborhood. If the home was newly remodeled with the latest fashions, then the seller could expect top dollar for the home.

In today's market place, many listings are REO's or bank owned homes that were foreclosed on because the homeowner couldn't afford to make the payments. More often than not, these homes need some repair and modernization to bring the home up to market standards. Many have structural issues that need correcting before a bank will lend to purchase. This presents a dilemma as many banks are losing large amounts of money on the sale and do not want to sink more money in a losing situation.

Options include paying cash for the home, which limits the market as most homebuyers in today's marketplace do not possess the funds to purchase a home for cash. Option two, the FHA 203k, the 203k is a rehabilitation loan offered by HUD to modernize and bring homes up to FHA standards. This loan allows the buyer to finance the rehabilitation into the purchase with a minimal down payment. The formula is as follows: purchase price, plus rehabilitation cost, equals adjusted gross sales price. The loan amount is ninety-six and a half percent of the adjusted gross sales price. That's right, you can purchase and rehabilitate a home with three and a half percent down.

The FHA 203k is an excellent option for financing when buying a fixer-upper, which is a fantastic way to build instant equity. Building instant equity in today's market makes buying fixer-uppers a great investment.

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Saturday, October 15, 2011

Cheap Government Mortgage Loans For Fixer-Uppers

Do you dream of a new home, but don't quite have the cash for a down payment? Are you willing to exchange sweat for equity? Then the government wants you to buy a fixer-upper home.
If you're handy around the house or enjoy remodeling you are a perfect candidate for a 203K or Rehab Mortgage Program. This unique government mortgage program is an innovative way to interest hardworking people into a new home and save the down payment for home improvements.
The Government Wants You to Rehab Homes
If you're willing to fix up a home that has been neglected or abandoned then the government wants to help you. In fact, the government is so motivated to get these homes off the market that they will help you with a cheap mortgage and require little to no down payment. The government understands that there are literally hundreds of homes, sitting vacant due to foreclosure or homeowners walking away. And they know that housing prices can't go up with these damaged homes sitting vacant.
Many of these homes are not disasters, but simply neglected by owners whom couldn't afford to maintain them for months (maybe even years). The government knows they need to have incentives for handy, hardworking people to patch them up and live in them to recover the housing market. They need people like you to get the economy jump started one home improvement at a time.
203K Loans Require Little or No Down Payment
The home buying incentive is an FHA (Federal Housing Administration) Loan with little to zero down payment. This provides you with an affordable mortgage and money left in your pocket to put into repairing and improving the home.
The really great part is not only are you saving on a down payment, but you are literally and immediately increasing the value of your home. If you have the ability or the capital to fix up your new home this is the best way to buy a home in this market. You get to put your cash and sweat directly into increasing the value of your real estate investment.
How Can I Use a FHA 203K (Rehab) Loan?
You're next question is probably, "How exactly can I use a Rehab Loan?" The good news is there are many ways to use this kind of mortgage to improve a new home or even
  • refinance and fix-up your current home.
  • To purchase a dwelling and the land on which the dwelling is located and rehabilitate it
  • To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it
  • To refinance existing indebtedness and rehabilitate a dwelling
If you are looking for the most affordable way to buy a home or need to refinance to fix up your existing home--you might want to check-out a FHA 203K (Rehab) Loan.

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Wednesday, October 12, 2011

7 Benefits of the FHA Home Loan Program!

The American dream of owning your own home is live and well in the United States because of the FHA Home Loan Program. The market for FHA Home Loans is booming and it is now the largest supplier of home mortgages. You can make your dream of owning your own home come true now!

The Federal Housing Administration (FHA) has many loan programs available that will help you achieve your goal of owning your own home.

What Is A FHA Home Loan?

FHA does not loan you the money to buy a house, what it does do is guarantee the loan. If the mortgage is defaulted then FHA will pay the lender.

This helps the lender because they will not have to write off the mortgage and suffer all of the loss.

Because of the FHA guarantee, lenders are certainly more willing the make more loans, and they will make them for larger amounts and also they will make them easier to get with fewer requirements.

Can You Qualify For The FHA Home Loan Program?

Of course, there have to be some limitations and requirements in order to get a FHA Home Mortgage. Here are a couple of restrictions:

Debt To Income Ratio

There is not an income limitation but you do have to have a certain debt to income ratio. This means your debt can not exceed a certain percentage of your income.

Limit On Amount Of Mortgage

Also, there is a restriction on the amount of the mortgage based on the area that you live in. Each area or region is different, you need to check with your FHA lender to see what the limit is in your area.

Is A FHA Home Mortgage Right For You?

A FHA Home Mortgage may not be right for you because of the limitation on the amount of money FHA will lend in your area. If you are looking at a $250,000 house and the loan amount limitation in your area is $200,000 then this type of mortgage will not work for you.

But, you can qualify for the FHA Home Loan Program then they can be great way to finance your new home or even refinance you existing home.

What Are The Benefits Of A FHA Home Loan?

1. You finance home improvements or repairs using a Streamlined FHA 203K Loan.

2. All FHA mortgages can be assumable. This can be a great benefit in the future if you want to sell your home and the interest rates are high.

3. The down payment is just 3.5% of the purchase price of your home. Most conventional home loans require at least 20% down payment.

4. Your down payment can be gifted to you.

5. Seller can pay your closing costs.

6. Credit scores can be as low as 585, but in today's mortgage market most lenders requires at least a credit score of 620. So, if your credit scores are a little low then a FHA mortgage may be for you.

7. Interest rates are low and very competitive with other types of mortgage loans. Because of the FHA guarantee most lenders will offer low interest rates.

With the low interest rates in the market and the abundance of homes on the market, now may be the time for you to persuade the American dream of owning your own home by financing it with a loan form the FHA Home Loan Program!

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Sunday, October 9, 2011

Features of the FHA 203K Streamline Refinance Program

The FHA 203k Streamline program has gained popularity recently due to the number of foreclosed homes that are being purchased that are in need of repair. The FHA 203k streamline program can be utilized both as a FHA refinancing option as well as a FHA new home purchase option.

An increasing number of foreclosed homes are using the popular FHA 203k streamline program due these homes needing repair. It is available for either a new home purchase or a refinance.

The FHA 203k Streamline is a different from the standard Section 203k loan due to it only permitting repairs costing a minimum of $5,000 up to a maximum of $35,000. Thus, the total mortgage loan will permit for property acquisition with up to $35,000 of the loan proceeds to be applied toward repairs or property rehab.

Some of the more common repairs completed using the FHA 203k Streamline program include:

o Repair rain gutters and downspouts

o Repair/upgrade of existing HVAC systems

o Minor repairs of plumbing and electrical systems

o Minor repairs of existing flooring

o Minor remodeling that does not involve structural repairs

o Exterior and interior painting

o New appliances - items such as free-standing ranges, refrigerators, washers/dryers, dishwashers and microwaves but may not be greater than $2,000

o Improvements for people with disabilities/handicaps

o In addition to the FHA 203k streamline program, there is a FHA 203k standard program - which will allow more than $35,000 to be used in repairs but requires more "major" work.

The FHA 203k standard includes work such as Structural improvements including room additions, re-wiring, major landscape work, patios, decks, terraces, energy conservation improvements, steel insulated exterior doors, rehab or improvement of a detached garage.

Some highlights of the loan include:

The borrower is allowed to finance six months of payments into the loan

Up to six percent of seller contributions are allowed on purchase loans.

As you can see these are some very attractive loans for homebuyers as well as existing homeowners when a property needs a little rehab.

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Thursday, October 6, 2011

When the Kitchen's Missing - Financing Fixers and Foreclosures

"I couldn't believe the kitchen was completely torn out," said Kara Sanders. The house was perfect for her family otherwise. "It's was the location we'd wanted - but we couldn't get financing."

Bad roofs, missing fixtures, holes in walls, all typical for foreclosed properties. Even buyers willing to fix houses have a problem - getting financing to close, paying for improvements.

"We didn't have an extra $20,000 to pay for all the work."

FHA's 203K program provides one loan to finance the purchase and the improvements. Escrow can close even if the property's in bad condition.

Here's an example:

$ 180,000 sales price of home
$ 40,000 cost of work to be completed

$ 220,000 total amount that financing is based on

With this example, the buyer would put $7,700 and finance $212,300. The 40,000 held for improvements would be paid out as work was completed.

"By the time we were finished, our house was worth over $300,000," added Kara. "It's better than any house we could have afforded to buy."

What's your first step? Get pre-approved for FHA Financing. When you find a house, you'll have to get contractor estimates, then estimates from a HUD approved estimator. Be sure that the house will be worth what you're paying for it, plus the improvements.

Kara Sanders was amazed. "I didn't even know this program existed. Now I'm telling everyone about it!"

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Sunday, October 2, 2011

Does That Foreclosure Need A Little TLC?

All across the US we have foreclosures sitting and waiting for an new owner. Some of the properties are in fine condition, but many are dilapidated and in disrepair. They sit and sit because traditional lenders will not lend on properties in disrepair. However, there is a solution to this and it can provide you and your family with a hefty future profit to boot.

FHA 203K and Fannie Mae Renovation Loans have been around for a while, but with the glut of new construction that occurred between 2001 and 2006 there wasn't much need for them. Not so anymore! All across the US foreclosures sit empty and unwanted, available at drastically reduced prices waiting for that buyer with enough gumption to take on the task of renovating a home. Every month I see buyers willing to take that plunge who end up sitting on 20-50% equity post close because they did.

How do Renovation Loans work? It's simpler than you think!

FHA 203K & 203K Streamline -- This loan works almost no differently than a traditional FHA loan. The qualification standards are that of regular FHA loans and the rates aren't that much different either. Here's the process..

1.) Buyer contacts an FHA approved lender for pre-approval & info on the proper format for the contract.

2.) Buyer locates a property.

3.) Buyer submits the sales contract and agrees to a price.

4.) Buyer forwards all credit docs to lender for credit approval.

5.) Buyer submits work write up to lender and appraisal is ordered.

6.) Buyer obtains contractor bids and hires contractor.

7.) Fully processed credit package is submitted to the lender and loan is approved.

8.) Loan closes for the purchase money and repair money is escrowed.

9.) 50% of the escrowed funds are released post closing to the contractor.

10.) Contractor completes work and remaining 50% of funds are released once the final inspection is completed

As you can see the process is pretty straightforward. The only difference between the 203K Streamline and the 203K full version is that a 203K Consultant is required for the full version. The scope and dollar amount of the repair determines if you will use a 203K or a 203K Streamline. The only caveat in the way we run the process is that we strongly recommend a consultant for almost all the 203K's we do. It seems to simply the process and it protects the buyer from unscrupulous contractors (or unscrupulous lenders).

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