Sunday, December 30, 2012

Buying and Remodeling a Home? Tips on Financing With One Loan


Buying and remodeling a home has always presented a financing dilemma: What's the most effective way to finance the home purchase and the cost of the remodel, without having to pay too much out of pocket? Many times, home buyers will shy away from these kinds of properties because they don't want to pay cash or put down a large down payment whn they buy, then have to turn around and pay out of pocket to rehab the home. There is a terrific financing option out there if you're willing to put up with a little red tape!
FHA's 203k loan program may not be as well-known as "typical" FHA loans, but it can be a terrific financing tool. Basically, the 203k loan allows you to purchase and rehab a home - all with one loan - all done at the time of acquisition. The FHA 203k loan has been around for years and was designed to streamline this process.
There are some guidelines and restrictions (after all, FHA is a governmental agency...), but it can be a very effective way to finance the property acquisition and rehab costs with one low down payment. Here are some brief highlights of the FHA 203k loan program:
  • Only One-to-Four unit properties are eligible
  • The structure must have been completed for at least one year
  • Cooperatives are excluded
  • Condominiums are eligible, but only for interior rehab
  • Demolition of existing structure is accepted, as long as the existing foundation remains
  • Rehab work has to be done by an FHA Certified contractor
There are many other restrictions, regulations and procedures, but it can definitely be worth it. This loan process can take a bit longer than a traditional FHA loan, and the appraisal typically costs a bit more (they have to estimate 2 values), so you would also need to factor that in. The lender also has to be FHA approved, but the down payment can be as low as 3.5%.
Thinking about remodeling your existing home? This particular FHA loan program is only for acquisition and rehab, but there are other financing alternatives out there for remodeling projects alone. 
The FHA 203k loan program is not perfect for every situation, but it can be worth checking out if you're planning to buy and rehab a property.
Article Source: http://EzineArticles.com/4252715

Friday, December 28, 2012

203K Loan - Get To Know The Basics


The Federal Housing Administration's 203k Loan enables people to borrow finance for ownership and improvement of a home in a single loan. This type of finance is insured by the FHA, which will enable the borrower to keep the interest rate at a lower level. Some of the basic information about this type of loan is discussed in the content given below:

This loan would be of great use to people in the United States to purchase a home or refinance a property that requires some work. This type of financing is otherwise called as fixer or rehab finance and it offers funds not only for purchase of new homes, but also for home improvement projects as well. Rather than obtaining two loans, the borrower can bring everything together under one loan. Some of the benefits that can be acquired by a borrower from this type of financing are discussed below:

Instead of two different loans for home improvement and home purchase the borrower can get both these finances under a single type loan, the paperwork and cost will be greatly minimized for the borrower. Because this loan is offered with a competitive rate of interest, it makes it possible for the borrower to get the amount of funding that they need at a reasonable payment. Now, let us understand about how this type of financing works:

FHA 203k Loan is designed for single to four unit properties; however, townhome owners and condo owners can make use of the program for meeting their interior designing project requirements. The maximum amount offered depends on the location of the borrower and FHA enables up to 110% of the projected value of the property after improvement. Even though the least value of finance is $5000, the streamline FHA permits the borrower to do smaller projects that involve easier processes. When it comes to improvement projects, funds are allocated to an escrow account and the money is paid out as the work gets completed. Any additional funds left over are then applied to the principle loan unless otherwise specified.

It is compulsory that the work must be completed within six months of closing and there will be padding put into the cost of the project in case it reaches more than the expected amount. However, keep in mind that once that excess is used the borrower can't get any more extra funds so budget wisely. This is why it is better to work with a reputable contractor, who can offer accurate estimates. Terms can range from 15 to 30 years and interest rates in this type of lending are a little bit more as compared to traditional FHA loans. This type of loan is not available to investors currently but some lending sources can offer them to non-profit organizations and of course all owner occupants so take advantage.


Article Source: http://EzineArticles.com/7397111

Monday, December 24, 2012

Happy Holidays!

Wishing You and Your Family
a Safe and Happy Holiday!

"Blessed is the season which engages
the whole world in a conspiracy of love!"

~Hamilton Wright Mabie


Friday, December 21, 2012

FHA's 203K Program Allows Borrower to Purchase Home and Finance Improvements in One Loan


In today's market with so many foreclosures and short sales, many homes do not meet the minimum FHA property guidelines. This means a traditional FHA loan (203B) is not available to borrowers that may be interested in the home. However, there is another FHA program called the 203K program that allows a borrower to finance the purchase of the home along with the costs of the improvements and/or repairs to get the home up to FHA guidelines. It requires only a 3.50% downpayment based on combining the purchase price and the cost of the needed repairs. Few lenders offer this specialized program yet it is a great way for buyers to purchase a home at a great price and finance repairs such as roof replacement, HVAC replacement or repair, kitchen remodel, flooring, etc... into a single loan to keep their payments down.
Here is a real world example:
A first time homebuyer is working with a realtor to find a home. Her realtor was familiar with the FHA 203K program and searched for homes that may provide a better value for her client as she was on a strict budget. She found a listing that had been on the market for over 200 days and was listed as "Cash Only Offers." The listing included this comment because the house needed a new roof, termite damage repairs and it was missing all of the sinks and toilets in the home. It was located in the neighborhood that client wanted to live but the homes were outside her budget. She looked at the home and was able to see the potential of the home and made an offer using FHA 203K financing. The seller accepted the offer and the buyer financed the price of home plus the costs of the repairs to get the home to FHA standards plus added an appliance package and flooring. The total cost of the home plus repairs was still less than the homes in the same market that did not need repairs yet were outside her budget. She closed on the home with her 3.50% down payment and the contractor began work. In a few short weeks, her lump of coal home was turned into her diamond. She was thrilled and loves her new home in a neighborhood she didn't think she could afford. As an added bonus, she knows the roof, sinks, toilets, appliances and flooring are all new.
How does the 203K loan process work?
The initial application is the same as a standard FHA loan and the borrower qualification requirements are the same. The difference is just about the property. When the buyer's home inspection is done, it is reviewed to better determine what repairs are needed to adhere to FHA standards. This gives everyone a good idea of the extent of the needed repairs. If any structural repairs are required, it will require a HUD consultant to do an inspection and write-up of the needed repairs and to monitor the project to its completion. If it is not structural (HVAC, roof, flooring, cabinets, appliances, plumbing, electrical), no HUD consultant is required as long as the repairs do not exceed $35,000.
The buyer gets bids from contractors for the required work and selects a contractor. The contractor then has to submit an application to be approved by the lender. The contractor's accepted bid is given to the FHA appraiser and the property is appraised based on the value of the home after the repairs are complete. Another benefit of the 203K is that the combined cost of the home and repairs can go up to 110% of the appraised value. This is particularly beneficial if some of the repairs are cosmetic and may not add directly to the value but to the marketability of the home. The appraisal, contractor approval and borrower's loan application is submitted to underwriting for approval.
Once the loan is fully approved, it goes to closing. At the time of closing, the seller is paid and the ownership is transferred to the buyer and the remaining funds are put in an escrow account for the repairs. Once the closing is complete, the contractor can begin the work based on the bid. When the work is complete, it is inspected and the contractor is paid from the escrow account.
This is a summarization of the process, but the whole idea is there is a way to purchase homes in the marketplace that are not perfect with a minimum downpayment. This benefits the buyer, seller and neighborhood.

Article Source: http://EzineArticles.com/3912282

Tuesday, December 18, 2012

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.

Saturday, December 15, 2012

FHA 203(k) Program - Additional Funds For Property Rehabilitation


The Section 203k Program is FHAs primary program for the rehabilitation and repair of single family properties. It has been a great tool for community and neighborhood revitalization. Many lenders have successfully used the program to help borrowers purchase and rehabilitate properties.
How it Works:
Typically when a homebuyer wants to purchase a home in need of repair or modernization, the buyer will normally need to obtain financing to purchase the dwelling; then additional financing for the repairs/construction; and finally a permanent mortgage when the work is complete to pay off the original loans involved.
With the FHA 203(k) program, the borrower can obtain a single long-term mortgage loan to finance both the acquisition and the rehabilitation of the property. In order to provide the funds the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work.
When the loan closes, the proceeds for the rehabilitation/improvement will be placed into an interest bearing escrow account insured by the FDIC or the NCUA. The lender will release these funds upon completion of the proposed rehabilitation in accordance with the Work Write-Up and the Draw Request.
Example: $20,000 in repairs is needed on a home where the purchase price is $200,000. The total mortgage amount would be $220,000. $200,000 goes to the actual sale, while the remaining $20,000 is placed into an escrow account and will be paid out once the work is complete.
Property Eligibility:
The property must be a one to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling.
Homes that have been demolished or will be razed are eligible provided some of the existing foundation system remains. The program can also be used to converts a one-family dwelling into a two, three, or four-family dwelling, and vice versa. An existing home (modular unit) on another site may be moved to the mortgaged property.
The loan may be originated on a "mixed use" residential property and condominium units provide it meets certain requirements. Visit http://www.HUD.gov for more details.
Eligible Improvements:
All repairs/construction must comply with the following:
1. New construction must conform to local codes and HUD Minimum Property Standards
2. To improve the thermal efficiency of the dwelling, the following are required:
-Weather-strip all doors and windows
-Caulk or seal all openings, cracks or joints.
-Insulate all openings in exterior walls where the cavity has been exposed.
-Insulate ceiling areas where needed.
3. Replacement Systems
-Heating, ventilating, and air conditioning system supply and return pipes and ducts must be insulated whenever they run through unconditioned spaces.
-Heating systems, burners, and air conditioning systems must be sized to be no greater than 15% oversized for the critical design, heating or cooling, except to satisfy the manufacturer's next closest nominal size.
4. Each sleeping area must be provided with a minimum of 1 approved, listed and labeled smoke detector installed adjacent to the sleeping area.
Luxury items and non-permanent improvements are not eligible. However the program may be used for such things as painting, room additions, decks and other items even if the home does not need any other improvements.
Required Exhibits:
The homebuyer must provide the lender with the appropriate architectural exhibits that clearly show the scope of the work to be completed.
The flowing are recommended exhibits, but may be modified by the local HUD Field Office:
-A plot Plan of the site is required only if a new addition is being made.
-Proposed Interior Plan of the Dwelling shows where structural or planning changes are contemplated.
-Work Write-up and Cost Estimate. Any format may be used, but the quantity and cost of each item must be shown. Cost estimates must include labor and materials sufficient to complete the work by a contractor.

Article Source: http://EzineArticles.com/2291119

Wednesday, December 12, 2012

Studio City Fixer-Upper


After four months' reno, new homeowners move into their Studio City home.

Sunday, December 9, 2012

Thursday, December 6, 2012

Monday, December 3, 2012

Friday, November 30, 2012

FHA 203K Mortgage - A Great FHA Mortgage Loan to Rehabilitate a Home!


To comprehend exactly what a FHA 203K Mortgage is we should for starters have an understanding of exactly what a FHA mortgage loan is.
The FHA provides federal government assured mortgages to home purchasers that provides the lenders the assurance to loan money to individuals they might not typically grant a home loan to.
It's not to imply that you will be borrowing funds coming from the federal government neither is it to say that by applying for a FHA mortgage loan you might routinely be accepted.
However it is to say that you will be more probably to be accepted for a FHA mortgage loan than the usual conventional mortgage when you have average or substandard credit rating, such as a bankruptcy, as well as lower than 20% for a down payment. Presently the down payment requirement is 3.5% and that is significantly lower than conventional mortgages.
One of the best deals currently offered by FHA and HUD is the HUD $100 Down Payment Incentive Program. You can buy a HUD foreclosed home with only $100 down payment and if you want to you can still use the FHA 203K Mortgage to rehab it if needed.
Now that we can comprehend the fundamentals of the FHA mortgage loan, it is time to introduce the fact, besides what the regular FHA loan provides, that there are numerous additional FHA home loan programs which home purchasers may decide to take benefit.
These includes the traditional 30 year fixed rate mortgage loan, traditional 15 and 20 year mortgage loans and even many types of adjustable rate mortgages also. You may also get qualified for refinancing or taking out the home equity by way of a home equity loan through FHA programs also.
It appears, although, that probably the most favorite FHA home loan programs that exist is a FHA 203k Mortgage. These loans have the common features of standard FHA mortgages such as versatile credit, assumable mortgages, as well as lower down payment to name some. Yet, they will go one step more by making it simple to rehabilitate a home all in a single loan grouped together.
Having an FHA 203K Mortgage may help individuals who have to renovate their present homes by acquiring financing to do. Also, home buyers may use these mortgages to buy and rehabilitate a pre-existing house in another place.
This could help everybody involved from the neighborhood by making surrounding places better for all the people of the community, to the property owners themselves by permitting people to buy what might be their own dream house, and as well as offering the money for making your dream home possible.
All of this, plus under one mortgage package deal, in the current unpredictable real estate marketplace, taking benefit of FHA programs is certainly the strategy to use!
Considering the glut of foreclosures in the marketplace which includes HUD homes for sale that a number of them needs repairs, the FHA 203K Mortgage could be the solution to acquiring or rehab your own dream home at a discount cost!

Article Source: http://EzineArticles.com/3847860

Tuesday, November 27, 2012

Financing For Mixed Use Properties - 203k Online.com


Mike Young talks about how a 203k mortgage is a great way to find financing for a mixed use property. See more at http://www.203konline.com

Saturday, November 24, 2012

HUD 203K Loan Explained

FHA loans require that a home be in livable condition before closing. If you are buying an investment property that needs extensive repairs then you will not be able to secure a FHA loan in order to purchase the property. Often, a bank will not grant a mortgage on a house that is in bad shape until the repairs are complete, and the repairs can't be done until you buy the house. Talk about a Catch 22! An alternative is the HUD 203(K) loan program.

The HUD 203(k) program makes it possible to purchase a property and include in the loan the cost of the repairs and improvements. It is an insured loan program that is available through approved lenders all across the country but is only available to people who will occupy the house. The down-payment requirement is 3% of the total cost-acquisition and repairs.

These are the steps to get a 203(k) loan:

o Locate a fixer-upper property. When you submit an offer make sure your purchase and sale contract stipulates you are seeking a 203(k) loan and that the contract is only in effect contingent upon approval of the 203(k).

o Find a lender who is approved by the FHA to grant these loans. Your loan application should include a detailed cost of each repair or improvement and an appraisal to determine the value of the property after renovation.

o If you pass the lender's credit worthiness test, you will be approved for a loan. The amount of the final loan will include a contingency reserve of 10 to 20 percent of the remodeling costs to cover any extra work that needs to be done.

o You close on the property, the seller is paid, and the money for repairs goes into an escrow account.

o Money for the contractor will be obtained through a series of draw requests; ten percent will be held back by the lender to assure that the work will be finished and there will be no liens on the property.

The main benefit of a HUD 203(k) loan is the ability to purchase a fixer upper property that requires extensive rehab work to bring it into a livable condition. In addition this loan reduces financing costs for borrowers with one mortgage by having only one set of closing costs that covers all eligible expenses.


Article Source: http://EzineArticles.com/2791812

Wednesday, November 21, 2012

FHA 203k Loan Information


FHA home loans, which are insured by the Federal Housing Administration (FHA), are great financing options for any homeowner who wants to purchase a house or refinance his or her current mortgage. These loans have low interest rates and usually only require down payments of 3.5 percent! FHA loan requirements are simple, so current and potential homeowners are more likely to qualify for these loans than other types of loans.

FHA 203k Rehabilitation Mortgage Insurance Program

The FHA has a specific loan program to help homeowners who want to make improvements or repairs on their home, but do not have the funds to do so. These loans are called FHA 203k loans and can be used for either a purchase or a refinance. There are two types of loans in this program, one loan is for repairs that cost less than $30,000 and the other loan is for repairs that cost more than $30,000.

A streamline FHA 203k option is also available to homeowners who are interested in doing non-structural repairs or improvements. This loan requires less documentation and can be less costly. It allows a homeowner to finance up to an additional $35,000 into his or her mortgage in order to make improvements to the home. An FHA home inspector or appraiser can identify home repairs that need to be made.

How the Loan Can Be Used

Although there are some restrictions on what the loan can be used for, there are plenty of renovations and home repairs that the loan does cover. In general, these include modernization, eliminating safety or health hazards, making a home more accessible for individuals with disabilities, or making a home more energy efficient. More specifically, the loan can be used for roofing, plumbing, flooring, painting, minor remodeling and more.

Loan Requirements

There are certain requirements with this type of financing. Homeowners must spend at least $5000 on their home repairs in order to be eligible. Homeowners must get cost estimates from a licensed and insured contractor(s) before signing the sales contract. The total cost of the mortgage, including the repairs, must remain within the FHA loan limits for the county in which the home is located.

This loan cannot be used to flip houses, and the homeowner must use the loan on the home in which he or she lives. The work being done on the house must begin within 30 days of the loan closing. All work must be completed within six months to comply with the loan requirements.

If a homeowner wants to make repairs to his or her home and needs additional financing, this type of financing could be the best option. Many of the same eligibility standards used for standard FHA home loans apply to the FHA 203k loan. Most lenders will require that the borrower have a credit score of at least 620 to be eligible. To qualify for the loan, certain energy efficiency standards, as well as certain structural standards, must be met.

This loan could be great solution for homeowners who want a better way to finance home repairs and improvements without depleting their savings.


Article Source: http://EzineArticles.com/3822169

Sunday, November 18, 2012

Money to Rehab Your Next Home


When looking for a home, not everyone wants the biggest, best and the newest home. In fact, some people like an old home. Homes with some age tend to have unique architecture, larger lots, more established neighborhoods, little to no HOA fees and they often represent a different type of home ownership all together. But what happens when the home needs so much work, the lender won't give you a loan to buy the home?

Unfortunately, FHA requires any home sold with an FHA loan to meet strict guidelines. Essentially if the government is going to back a mortgage, they want to home to be in good working condition and habitable. This presents a problem to a lot of homeowners looking for an older home, because anything from cracked windows, non-standard flooring, roof damage, missing appliances, etc will be grounds for FHA denying the loan.

This is where the 203k program comes in. Through this program the homebuyer can receive an additional loan for up to $35,000 to repair or improve the home to meet FHA guidelines. In order for this to work, the buyer hires a contract to get bids on everything that needs to be done, they submit the bids to the lender and the lender finances the additional amount for the repair. The money for the repair goes into an escrow account to pay the contractor for the work when it is completed. After the transaction has closed and the buyer takes possession of the home, the buyer has 90 days to get the contractor to complete all the work on the home. Once the work is completed the contractor gets paid and the escrow account closes. This is a great program for anyone looking at a foreclosure home and the home may be in less than perfect condition.

A common question is, "will the additional loan hurt the appraisal value of the home?" The answer here, is "most likely no". As long as the purchase price of the home represents the fair market price of the home, then any repairs made with this program would increase the value of the home by the amount of the repairs being done, if not more. What if you are looking at homes in the top of your price range, and can not afford the higher mortgage amount? In this case, the best way to look at it would be to find a home that needs a fair amount of work done, and bring in a reasonably low offer. Lets say the home is priced at $170,000 but you see it will need at least $20,000 in repair. Place an offer for $145,000 to $150,000 and let the seller know of your intentions to bring the home up to FHA standards through the 203k Streamline program. In most cases, the listing agent or the owner of the property will be well aware of the challenges involved with selling a home that won't pass FHA inspection/approval, and they will welcome the lower offer and knowing you plan on making the deal work with an FHA loan.

Talk with a qualified loan officer about the additional details involved with this program. It is a pretty simple and straight forward, program, nevertheless, it is always a good idea to talk about the program with the person who will be helping you through the process.


Article Source: http://EzineArticles.com/1451718

Thursday, November 15, 2012

The Secrets of the Mysterious FHA 203(k) Rehabilitation Home Loan Unveiled


The FHA 203(k) Home Renovation Loan is perfect for HUD foreclosures, handy-man specials, or any home in need of repair. This is because it offers borrowers the ability to finance the cost of the rehabilitation of a property. And this loan can be used for either the borrower's current residence or a fixer-upper into which a borrower wishes to move. The eligible improvements allowed on FHA 203(k) loans are numerous, and many clients are pleasantly surprised at just how useful of a tool this loan can be. For instance, in addition to typical home improvement loan projects, the FHA 203(k) mortgage loan program can be used to convert a one-family dwelling to a two-, three-, or four-family dwelling.
The 203(k) Program is not offered directly by the FHA, meaning that one cannot apply directly to the government for the loan. Instead, it is offered to the public through FHA-approved lending institutions. It is to one of these institutions that a client applies. And it is one of these lending institutions that ultimately approves and funds the loan. The FHA sets the guidelines and insures the loans to facilitate liberal lending and help with the sale of these loans on the secondary market.
Originally utilized primarily for purchases, the FHA 203(k) loan program was created to help revitalize properties into which families could move and live. As time has passed, these loans have also been made available to existing homeowners seeking to refinance one to four family residences. These residences must be existing structures, at least 1 year old, and be used for residential purposes. This means that they must be owner-occupied. To lenders of traditional loans, these properties in need of repair are considered poor collateral on which they would prefer not to lend. To the FHA, which is committed to expanding home ownership through insurance and more liberal underwriting guidelines, such properties are not only acceptable but also desirable.
The standard FHA 203(k) loan includes purchases or refinances that involve more than $35,000 in repairs. It is available to augment an FHA Energy Efficient Mortgage (EEM), insure the mortgage on a single-family housing unit sold from the REO inventory of HUD, or to insure a mortgage that covers both repairs costs and the refinance of an existing mortgage. Once this $35,000 threshold is reached, it is necessary to involve both an appraiser and a consultant. The consultant prepares the work write-up and cost estimate. An architect, engineering or home inspection service then needs to inspect the property to ensure that:
  1. There are no rodents, dry-rot, termites and other infestation;
  2. There are no defects that will affect the health and safety of the occupants;
  3. The existing structural, heating, plumbing, electrical and roofing systems are adequate; and
  4. The completion of thermal protection upgrades (where necessary).
As such, on a standard FHA 203(k) loan, the process is often as follows:
  • Contact lender for pre-approval
  • Locate property & make offer
  • Offer accepted
  • Home inspection
  • FHA 203K consultancy
  • Architectural drawings
  • Contractor bids & contractor selection
  • Appraisal Loan submission & underwriting
  • Underwriting conditions cleared
  • Loan closing
  • Repair begins Final inspection / Title Closeout
The easiest and quickest version of the program is the FHA 203K Streamline. This allows a home buyer or homeowner to finance up to $35,000 of home repairs in the purchase or refinance of a home. It does not involve HUD 203K Consultants or architects. This is because the Streamline is intended to facilitate uncomplicated rehabilitation or improvements to a home for which plans, consultants, engineers and/or architects are not required. The Streamlined (k) program includes discretionary improvements and/or the following:
  • Repair/Replacement of roofs, gutters and downspouts
  • Repair/Replacement/upgrade of existing HVAC systems
  • Repair/Replacement/upgrade of plumbing and electrical systems
  • Repair/Replacement of flooring
  • Minor remodeling, such as kitchens, which does not involve structural repairs
  • Painting, both exterior and interior
  • Weatherization, including storm windows and doors, insulation, weather stripping, etc.
So, whether it is to finance an impossible to pass-up foreclosure deal, the addition of a new deck, the replacement of a bathroom, saving the purchase of a home that the bank turned down due to property condition or making a change that turns an ordinary home into your dream home, the FHA 203(k) Loan can help.
Article Source: http://EzineArticles.com/1992070

Monday, November 12, 2012

FHA 203K Mortgages - Light Rehab of Up to 35K in Repairs

The Federal Housing Authority or FHA also offers the 203k loan that is for light rehabilitation to a dwelling that requires $35,000 in repairs or less. This is called the Streamline 203k loan. This loan is great for buyers who may pass on a home because it needs minor repairs. This loan is different from major rehab version of the loan by the same name and eliminates paperwork and simplifies the rehab fund process.

How it Works

The 203k Mortgage for light rehabilitation works for homes for sales as well as improvements to existing homes. Its features include 30 year fixed or adjustable loans, 110% loan to value ratio, appraised value is given after the improvements are made to enhance the homes worth, and is great for minor rehabilitation repairs or revitalization.

You must occupy the home within 60 days after the repairs are completed and funds are disbursed to the contractor you pick in two stages. First, a 50% materials draw is funded and when the completion of repairs is 100%, the remainder of the funds is released.

Quick Facts

The Streamline minor rehab loan may be calculated into the original loan balance creating one loan. It can be an adjustable or fixed rate and the mortgage balance can exceed the purchase price of the property. Borrowers do not have to hire professional engineers or architects. A home inspector or an appraiser will create a list of needed or recommended repairs or improvements and you can do the repairs yourself, or hire a contractor.

Eligible Rehab Repairs

This loan is used mostly for light cosmetic repairs not exceeding $35,000 and includes roofs, gutters, and downspouts. It may also be used for HVAC systems, electrical, plumbing, minor improvements to kitchens or bathrooms, flooring, interior and exterior painting as well as new windows and door and weather stripping and insulation. The 203k light rehab loan encourages funds for handicap accessible improvements, energy efficient additions, removing lead paint, and the addition of decks, patios, porches, septic and well system. A buyer may also purchase new kitchen appliances and a washer or dryer.

Ineligible Rehab Repairs

Items not eligible are landscaping and yard work and major remodeling or rehabilitation to any dwelling. It is also not for moving walls, adding rooms or fixing extensive structural damage.

What Are the Terms?

With the 203k light rehab loan, no minimum loan balance is required; however, buyers must intend to occupy the property once the light rehab repairs are complete. The property may not be vacant for more than 30 days and all work must be completed within six months. You do not have to hire a HUD approved contractor; however, a professional must complete your light rehab repairs. All repairs must commence within 30 days after the closing.

Who Does the Work?

This type of mortgage allows the buyer to select their licensed contractor and the lender will review the contractor's experience. The lender will get a firm estimate from the chosen contractor and buyers may even arrange to complete some of the work themselves. If you go the do-it-yourself route, the lender will require documentation showing that you are qualified to complete the light rehab repairs.

Summary

The StreamlineK light rehab mortgage is great to make improvements to your owner-occupied home if the repairs are under $35,000. If the repairs fall below $15,000, the lender is not usually required to perform an inspection and a letter from the borrower is sufficient along with contractor receipts as notice of completion of work.

Perspective homeowners now have the option of buying a home in need of light rehab repairs and it's a lot less paperwork than the major rehab version. The 203k Streamline line loan may also be used as a home improvement loan. If the home you are looking at needs minor rehab repairs, ask your lender to check on this mortgage loans availability.


Article Source: http://EzineArticles.com/2128068

Friday, November 9, 2012

Buying Your Dream Foreclosure For 3.5% Down - FHA HUD Loan


A FHA (Federal Housing Administration) loan is especially suitable for first-time home buyers. The U.S. Department of Housing and Urban Development (HUD) acquires FHA-insured homes which have been foreclosed. HUD homes are made available for sale through websites run by management companies contracted by HUD. Real estate agents who are registered with HUD can present offers on behalf of their clients. The agent's commission is paid by HUD.

HUD homes are sold on an 'as is' basis with no warranty. Since HUD does not take responsibility for any repairs, it is important to have the home inspected prior to making the offer. The down payment for FHA loans is only 3.5%, which is significantly lower than the 20% paid for conventional loans. This down payment can come from own savings, family members, employers or charity organizations. Closing costs for FHA loans are also significantly lower than conventional mortgages. An exception to the 3.5% down payment is the HUD $100 down payment initiative. Buyers can now purchase a HUD foreclosed home with only $100 down payment.

FHA has designed various mortgage loans for the public. Depending on an individual's ability, one can select either an FHA fixed rate mortgage loan or FHA adjustable rate mortgage loan. There are also other special loans like the graduated payment mortgage loan, energy efficient loans, and other loans for other different needs. However, one of the most popular FHA loan programs is the FHA 203K Mortgage. This mortgage enables individuals to acquire financing to renovate their present homes. In addition, the FHA 203K mortgage can also be used to purchase and rehabilitate a house in a different place. Once the buyer decides which FHA mortgage suits them, they can go ahead to apply for the loan. Professional advice for choosing an appropriate loan can be provided by a mortgage loan broker.

Despite the friendly terms of FHA mortgage loans, individuals have to fulfill certain FHA mortgage guidelines. These requirements are in accordance to federal guidelines. To get an FHA loan, one must have been in stable employment, if possible with the same employer, for two years. The borrower should have a minimum credit score of 580, and a debt-to-income ratio of less than 41%. Monthly payments should not exceed 30% of the borrower's salary. FHA will allow individuals to purchase a home three years after a foreclosure, and two years after a bankruptcy.

Since FHA loans are insured by the federal government, they come with competitive interest rates and lenders are likely to give friendly terms that will simplify the process of getting a loan. Even with less-than-perfect credit, FHA loans are easier to obtain than conventional mortgage. In particularly designated areas, K-12 teachers, law enforcement officers, emergency medical technicians and fire fighters can buy a home at price 50% less than the listed price. In addition, evacuees from hurricanes Rita, Katrina or Wilma can buy a HUD home at a discounted rate.


Article Source: http://EzineArticles.com/4188289

Tuesday, November 6, 2012

Home Mortgage Loans From the FHA: Some Helpful Points


There are significant difficulties today in financing the purchase of a new home. This is mainly down to the poor state of the economy, but it is still possible to get an affordable home mortgage loans.
The Federal Housing Administration (FHA) makes this possible, providing support to borrowers by ensuring interest rates are lower, down payments are lower and making approval more likely. In fact, getting an FHA loan approval is not difficult if all of the right boxes are ticked.
However, even with an FHA mortgage loan, it is possible to improve matters to such an extent that it becomes even more affordable. Even with the required down payments less than 3%, and 100 % financing available in certain situations, the terms can be improved.
Improving Your Credit Score
There is no escaping the fact that a home mortgage loan is the biggest debt that anyone will take on. For this reason, spending time improving the bad credit scores in order to improve the overall mortgage package is well worth the effort.
There are a few ways to accomplish this, with the most effective being a consolidation loan. By buying existing debts out, they are marked down as repaid, which improves the credit score immediately. An added bonus is that one loan and one interest rate means that money is saved, and extra cash is made available. So, FHA loan approval is all but guaranteed.
Of course, the first step is to find out what the credit score is. This can be done by contacting one of the three credit agencies (Equifax, Experian and TransUnion). Check that the scores are accurate, and ask for a review if it seems wrong. The score may be improved, this strengthening the application of an FHA mortgage loan.
Changing Jobs is Not Wise
A career move is usually viewed as good, but when preparing to apply for a home mortgage loan the opposite is true. This is because they like to know that the income will be consistent. Changing a job brings with it risks, with new employers setting new expectations.
Showing that a job and income is reliable makes for a strong pitch. This is why applicants who frequently change jobs tend to find it hard to secure large loans, never mind a mortgage of more than a hundred thousand dollars. It would be easier to get FHA loan approval when the applicant has been working for a long period of time by the same employers.
However, that is not to say that, after approval on an FHA mortgage loan is received, the borrower is tied to the same employer. Moving for a better job with better prospects should be done either well in advance or after the application is made.
Control Your Applications
Getting things in order for the home mortgage loan application can take time. But it is important to maintain financial discipline during it. This is because, when the application is eventually made, the lender does not want to see a list of attempts to secure other forms of financing - for example a credit card application.
There are some allowances of course, especially if a loan within the last 12 months was used to clear debts. But credit cards, holiday loans and auto loans are a different matter. FHA loan approval is made more difficult if they are evident. Basically, the lender wants to see discipline, meaning complete focus on getting an FHA mortgage loan and nothing that is unnecessary.

Article Source: http://EzineArticles.com/7237627

Saturday, November 3, 2012

The Secrets of the Mysterious FHA 203(k) Rehabilitation Home Loan Unveiled


The FHA 203(k) Home Renovation Loan is perfect for HUD foreclosures, handy-man specials, or any home in need of repair. This is because it offers borrowers the ability to finance the cost of the rehabilitation of a property. And this loan can be used for either the borrower's current residence or a fixer-upper into which a borrower wishes to move. The eligible improvements allowed on FHA 203(k) loans are numerous, and many clients are pleasantly surprised at just how useful of a tool this loan can be. For instance, in addition to typical home improvement loan projects, the FHA 203(k) mortgage loan program can be used to convert a one-family dwelling to a two-, three-, or four-family dwelling.
The 203(k) Program is not offered directly by the FHA, meaning that one cannot apply directly to the government for the loan. Instead, it is offered to the public through FHA-approved lending institutions. It is to one of these institutions that a client applies. And it is one of these lending institutions that ultimately approves and funds the loan. The FHA sets the guidelines and insures the loans to facilitate liberal lending and help with the sale of these loans on the secondary market.
Originally utilized primarily for purchases, the FHA 203(k) loan program was created to help revitalize properties into which families could move and live. As time has passed, these loans have also been made available to existing homeowners seeking to refinance one to four family residences. These residences must be existing structures, at least 1 year old, and be used for residential purposes. This means that they must be owner-occupied. To lenders of traditional loans, these properties in need of repair are considered poor collateral on which they would prefer not to lend. To the FHA, which is committed to expanding home ownership through insurance and more liberal underwriting guidelines, such properties are not only acceptable but also desirable.
The standard FHA 203(k) loan includes purchases or refinances that involve more than $35,000 in repairs. It is available to augment an FHA Energy Efficient Mortgage (EEM), insure the mortgage on a single-family housing unit sold from the REO inventory of HUD, or to insure a mortgage that covers both repairs costs and the refinance of an existing mortgage. Once this $35,000 threshold is reached, it is necessary to involve both an appraiser and a consultant. The consultant prepares the work write-up and cost estimate. An architect, engineering or home inspection service then needs to inspect the property to ensure that:
  1. There are no rodents, dry-rot, termites and other infestation;
  2. There are no defects that will affect the health and safety of the occupants;
  3. The existing structural, heating, plumbing, electrical and roofing systems are adequate; and
  4. The completion of thermal protection upgrades (where necessary).
As such, on a standard FHA 203(k) loan, the process is often as follows:
  • Contact lender for pre-approval
  • Locate property & make offer
  • Offer accepted
  • Home inspection
  • FHA 203K consultancy
  • Architectural drawings
  • Contractor bids & contractor selection
  • Appraisal Loan submission & underwriting
  • Underwriting conditions cleared
  • Loan closing
  • Repair begins Final inspection / Title Closeout
The easiest and quickest version of the program is the FHA 203K Streamline. This allows a home buyer or homeowner to finance up to $35,000 of home repairs in the purchase or refinance of a home. It does not involve HUD 203K Consultants or architects. This is because the Streamline is intended to facilitate uncomplicated rehabilitation or improvements to a home for which plans, consultants, engineers and/or architects are not required. The Streamlined (k) program includes discretionary improvements and/or the following:
  • Repair/Replacement of roofs, gutters and downspouts
  • Repair/Replacement/upgrade of existing HVAC systems
  • Repair/Replacement/upgrade of plumbing and electrical systems
  • Repair/Replacement of flooring
  • Minor remodeling, such as kitchens, which does not involve structural repairs
  • Painting, both exterior and interior
  • Weatherization, including storm windows and doors, insulation, weather stripping, etc.
So, whether it is to finance an impossible to pass-up foreclosure deal, the addition of a new deck, the replacement of a bathroom, saving the purchase of a home that the bank turned down due to property condition or making a change that turns an ordinary home into your dream home, the FHA 203(k) Loan can help.
Article Source: http://EzineArticles.com/1992070

Wednesday, October 31, 2012

Use An FHA 203K Loan To Buy A Home That Needs Renovation

The recent housing collapse has many people who were considering buying a home feeling a little uneasy. There are many questions on the minds of would-be homeowners.

If you are one of these many people, you may be wondering if the market is right for you, if you can afford to own your own home, and how you go about it without sacrificing everything. The good news is that the market is perfect for first time buyers and that there are options even if you don't have a tremendous amount of money for a down payment.

I Can't Afford to Own My Own Home

This is a common belief held by many renters or other potential homeowners. First, you probably think you need to have a huge amount of money just sitting in your bank as a down payment before you can even think of owning a home.

In today's economy, setting aside tens of thousands of dollars for a big down payment can seem like an unconquerable obstacle for a first time buyer. After that, you would have no money left over to renovate, buy all appliances you need, or even have a safety cushion in case of an emergency.

Prior to the 203K renovation loan, you would have to pay for all of your needed renovations right out of pocket. Fortunately, there is an option for you that you may not know about.

The Advantage of the 203K Loan

FHA insured 203K renovation loans are designed especially for first time home buyers who don't feel as though they can afford the costs associated with a home that needs repairs. You may already have considered distressed homes listed as foreclosures at a local bank.

These homes are ideal for a first time buyer, and a 203K loan is ideal for these kinds of homes. What a 203K allows you to do is wrap up the mortgage from a distressed home and all the renovation costs into one affordable package. The initial down payment is incredibly low and the interest rates are historically low.

With one of these loans, you can afford a distressed house from a bank foreclosure which will typically be had for substantially less than a renovated house since the bank will want to unload it quickly. You will also be able to use the loan to pay for certain renovations without incurring a huge out of pocket expense.

Find an Experienced Realtor and Lender

You will want to discuss the 203K option with your real estate agent if you have one and if you don't you will want to consider multiple lending agencies or loan officers before you make your decision. If you decide that a 203K is right for you, you can begin looking at properties to assess what the initial costs will be and how much renovation they will need.

If you are able to find a distressed home in a neighborhood you like, you can get it for well below market value and spend the money you save on renovations. In the end, even someone with little money to put down can turn a foreclosed distressed home into the home of their dreams.

Article Source: http://EzineArticles.com/6454358

Sunday, October 28, 2012

Basics Of FHA 203k Loan Rates


Before you learn about the 203k loan rates, you must know what it means and how it affects your finance. Basically, the Federal Housing Administration (FHA) is a United States government agency that was established as a part of the National Housing Act of 1934. This agency was created with the following goals:
1. To improve housing conditions and standards
2. To provide a proper home financing system through mortgage loan
3. To control and stabilize the mortgage market
Sometimes FHA 203k loans are also called 'rehab' or 'fixed'. 203k loan scheme comprises two loans together - home improvement loan and credits for buying a new project. Following is a discussion regarding the advantages and disadvantages of applying for credits with 203k loan rates.
Advantages and disadvantages
The major benefit of a 203k loan is that you get only one scheme for both home improvement and purchase of a property. This reduces your paperwork and the costs that are incurred in the whole process. Being a government funded agency, the rates are quite competitive as compared to banks and other lenders. With 203k loan rates of interest buying a home that banks might otherwise not provide funding for, becomes easier.
There are not many disadvantages of a FHA 203k loan rates for funding home improvement or property buying project. It just takes longer to close. To minimize the disadvantages, there are many credit broking organizations that might help you to drift smoothly with your money management.
Working of 203k
This scheme can pay for a home and its improvement. The amount of the money borrowed that you are entitled to depend on your geographic location. The amount of coverage also varies accordingly. Generally FHA 203k loan rates of interest are for loans which are 110 percent of home's projected value after the improvement or purchase. There are also smaller schemes which allow you to take on smaller projects. 203k loan rates are based on the agreement that work must be finished within 6 months of closing. Remember that you cannot borrow extra amounts if you run out of the amount given to you. You must therefore consult with a good broking company that might help you with accurate estimation prior to application for the amount.
One such company is Great Northern Mortgage Corporation. You can get all types of solutions and services regarding mortgages, loans, debt consolidation, and managing your finances.

Article Source: http://EzineArticles.com/5083368

Thursday, October 25, 2012

Looking for a Fixer Upper?


Thinking about buying a fixer upper? Learn more about the FHA 203(k) loan program. 

Monday, October 22, 2012

Don't Buy a Foreclosed or Short-Sale Property Without Reading This White Paper First!

FHA 203k Renovation Loan, the Unsung (and little known) Hero of the Existing Home Sales Mortgage Loan Market

Every once in a while, a Government-backed program designed to help millions of average Americans goes unnoticed and under-utilized, largely because of a lack of public information servicing, as well as misunderstanding and misconceptions about the program. The FHA 203k Rehabilitation Loan is just such an unknown gem.

What is an FHA 203k Mortgage Loan?

The FHA 203k Loan is designed to provide cash to repair, renovate, or remodel an owner-occupied residential home. It can also be used for multi-unit residential rental properties of three or less units, as long as one of the units is owner-occupied. The home's value must come in under or at the FHA Loan limits established for the County that the home is located in, and must also conform to minimum HUD standards.

The loan's amount is based on the mortgage amount plus the amount of added appraised valued to the property that will be realized once the renovation or remodeling projects have been completed, thereby providing much needed cash to complete the construction projects.

The loans aren't offered by all Mortgage Lenders, and each Lender has established the guidelines under which they will offer the loan.

What Can the FHA 203k Mortgage Loan be Used For?

The FHA 203k Rehabilitation Loan can be used for a wide range of residential property improvements including bringing the home up to the latest trends and styles in kitchens and bath design, completing exterior or interior repairs, replacing old appliances with new Energy Star appliances and HVAC systems, undergoing complete renovations and additions, replacing flooring, and even landscaping. There are a small number of "luxury item" exclusions, such as hot tubs and swimming pools (although some maintenance and repairs are covered).

There are two versions of the loan; a "Streamlined" loan which can provide up to $35,000 of cash to make "non-structural" repairs and improvements, and the "Full" loan which covers a broader range products and services and can provide cash of up to 35% of the property's appraised value (including the value of the improvements being made). Your Mortgage Lender can help you decide which loan is best for your particular situation.

Why the 203k is a Loan for Our Time (A Rare Source of Renovation Financing)

The FHA 203k loan helps solve a major problem facing the current residential real estate market; how to accelerate the sale (and removal) of these distressed properties from the sales inventory.

A large percentage of the current existing home sales market comprised of "Distressed Properties". These include not only homes that have been foreclosed on and are now bank owned, but also homes that are being marketed under a "short sale" agreement with the financial institution that holds the note on the home.

Many of these homes suffer deterioration due to being un-occupied, as well as having regular maintenance that was never performed on the home. There are also instances these types of properties that have become victim to vandalism.

Even if these homes have been reasonably maintained, they generally fall outside of the current kitchen and bath design trends and styles. This makes them an extremely attractive bargain, because these types of projects add the most "bang for the buck" and greatly increase the likelihood that the remodeling projects will add substantially to the appraised value of the property after taking into account the improvements.

The FHA 203 loan is a fantastic option for financing remodeling and repair projects at a time when limited solutions exist in the market place that provide cash for these purposes. What's more The FHA 203k loan can not only be used to purchase a home and finance improvements, but can be used to re-finance an existing home and provide cash to do all of the same types of constructions projects.

Why Waiting to Renovate Often Translates into Never Renovating

The vast majority of remodeling and repair projects fail to be funded to completion or ever undertaken at all. It is very difficult for the average homeowner to finance large projects withcash reserves, primarily because of the many competing priorities on the family's finances and cash.

Consequently, those projects that can add many years of enjoyment and utility to one's home never materialize. What's more, ongoing maintenance and repairs often get deferred, resulting in larger and more expensive repair projects that occur due to added years of destructive weather and pest damage.

The absolute best time to renovate your home is at the beginning of your ownership. This is the time when you are taking the home that you purchased and molding it into your lifestyle and furnishings. Create your perfect paradise by integrating remodel projects into your other move-in projects, and then sit back and enjoy the home paradise that you've custom-tailored to meet your standards and desires.


Article Source: http://EzineArticles.com/6647846