Thursday, March 29, 2012

FHA 203k Success Story

Learn how this young couple turned a HUD foreclosure from a dog into a dream home with an FHA 203k renovation home loan. They purchased and remodeled a home in Moreno Valley using the Good Neighbor Next Door 50% off program with just 3.5% down and included money for all fix up costs including a new kitchen, bathrooms, flooring, paint , carpet, windows, doors, new roof, HVAC system

Monday, March 26, 2012

FHA 203K Loan - The Best FHA Home Loan to Rehab a Home!

To understand what a FHA 203k loan is we must first understand what exactly a FHA home loan is. The FHA -- Federal Housing Authority -- offers government guaranteed loans to home buyers which gives the banks the confidence to lend money to people they may not normally grant a mortgage to.

This is not to say that the you are borrowing money from the government nor is it to say that by applying for a FHA home loan you will automatically be approved, but it is to say that you are more likely to approved for a FHA home loan than a conventional loan if you have average or below average credit, including a bankruptcy, and less than 20% for a down payment, currently the down payment requirement is 3.5% -- which is considerably lower.

Now that we understand the basics of a FHA home loan, it is time to introduce the fact that in addition to the standard FHA loan offered, there are many other FHA loan programs that home buyers may wish to take advantage of including the traditional 30 year fixed rate mortgage, standard 15 and 20 year mortgages and even any manner of adjustable rate mortgages as well, you can even get qualified for refinancing or taking out the home equity via a home equity loan through FHA programs as well.

It seems, though, that one of the most popular FHA loan programs that are offered is the FHA 203k loan. These loans carry the standard features of traditional FHA loans -- flexible credit, assumable loans, and low down payment to name a few -- but goes a step further by making it easy to rehabilitate a home all in one loan packaged together.

Using an FHA 203k loan can help people who need to renovate their current homes by securing financing to do so or home buyers can use these loans to purchase and rehab a preexisting home elsewhere.

This can benefit everyone involved from the community by making surrounding areas nicer for all citizens, to the home owners themselves by allowing them to purchase what could be their dream home and providing the funds to make their dream a reality. All of that and under one loan package, in today's unstable housing market, taking advantage of FHA programs is definitely the way to go.

With the glut of foreclosures on the market including HUD homes for sale which some of them requires repairs, the FHA 203K Loan may be the answer to purchasing your dream home at a bargain price!

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Friday, March 23, 2012

Bad Credit Score Mortgage - No Problem With FHA

If your FICO credit score has tanked due to temporary cash flow issues in the past, the good news is you may still be able to qualify for a mortgage - and at a decent interest rate.

FHA has been making it affordable for millions of "less than perfect credit" borrowers qualify for a bad credit score mortgage since 1934.

The reason you'll get a mortgage loan is FHA doesn't require a strict FICO score to qualify for the program. There are guidelines however, but the whole process is a bit more subjective than qualifying for a conventional loan, taking into account any offsetting factors that tend equalize bad credit.

For example, say your income has gone up and your ability to pay monthly obligations has improved. FHA likes that. You can't erase bad credit, but you can present yourself as less of a risk to the lender.

An FHA lender will look at your increased income as an offsetting factor that decreases your risk as a borrower. This is a good thing for you.

Also, these loans are insured by the Federal Government, so once you are approved, the lender is covered in case you default on the loan.

The Federal Housing Administration also requires you only put 3% down payment toward the loan. This holds true for a purchase or if you are refinancing your home. You can even get the cash from a relative or in the case of a refinance, use the equity built up in your home as the down payment.

So, If you're looking for a bad credit score mortgage or refinance, strongly consider an FHA loan, you'll benefit by being able to afford a home that you otherwise could not afford.

Hard working families that may have damaged credit and very little down payment can still experience the joy of home ownership with an FHA loan. Qualifying is much easier than you may think - visit: FHA qualifications

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Tuesday, March 20, 2012

Consider Repairing Your Home With the Help of FHA 203k Streamline Rehab Loans

Are you considering buying a home that needs repairs or rehabilitation? Are you living in a home that needs repairs or updates, but can't find a loan to pay for those needed repairs? HUD has a program for which you may qualify. The FHA Streamline 203k Rehab Loan is designed just for people who would like to purchase a home that needs repairs or would like to refinance their home and make needed repairs.
Typically, when you purchase a home that needs repairs, you have to set up a complicated series of loans. First, you have to take out a loan for the home's current value, then find a lender to borrow the money for the repairs. Finally, after the repairs are finished, you have to refinance the home at its new value and pay off the first mortgage and the repair loan. The FHA 203k Rehab loan is designed to streamline that process. With a FHA 203k loan, you take out a mortgage on your home and specify the repairs needed and their expected cost. The amount for the repairs is put into an escrow account on which you can draw as the work is completed.  FHA 203k loans are available to first time home buyers and others who may not qualify for traditional commercial loan products.
How can I use the FHA 203k Loan program?
FHA 203k loans can be used to secure a mortgage in three ways:
- You can use an FHA 203k loan to buy a dwelling and the land on which it sits and do repair and rehab work in place
- You can use an FHA 203k loan to buy a building on another site and move it to a new foundation on the mortgaged property and repair it
- You can use an FHA 203k loan to refinance an existing mortgage and repair the mortgaged dwelling
What properties are eligible for Arizona FHA 203k financing?
FHA 203k loans can be used to purchase or refinance one to four unit family dwellings, including condominium units under certain circumstances.
What repairs are allowed under an FHA 203k loan?
A homeowner can use a 203k loan to make needed repairs that become a permanent part of the existing home. The cost of the repairs must be at least $5,000 and less than $35,000, except under very specific circumstances. If a home requires updates or repairs to meet energy efficiency or safety standards, those must be included in the loan amount and must be completed before other repairs. If there are no required repairs, then FHA 203k financing can be used for painting, room additions, decks and even to upgrade appliances in a home. Among the repairs that qualify under the $5,000 minimum requirement are:
- Reconstruction and structural repairs like chimney repairs, repairs of termite damage, roof repairs, addition of skylights
- Modernization or projects that improve function like adding or updating a bathroom, remodeling a kitchen or adding built-in appliances to a kitchen
- Eliminating health and safety hazards, like lead paint or asbestos abatement
- Changes for aesthetic appeal like new siding or adding a second story to the home
- Plumbing replacement or reconditioning, including the installation of new plumbing fixtures like interior whirlpool tubs
- Energy efficiency improvements like the addition of solar panels or caulking and weather stripping, or installation of double hung windows, etc

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Saturday, March 17, 2012

Your Contract With the Contractor on the FHA Renovation Loan Program

My personal opinion is about mortgage loans is the FHA Renovation Loan Program is the most exciting loan program available, There are so many exciting things about this program so it becomes very complex and that is why it is very important that anyone involved with this program really understands.
By taking the time upfront to learn this program is will save a lot of problems during processing and closing. Once the loan closes, the Borrower and the Contractor must be on one accord or there can really be problems. The Borrower and the Contractor must sign the FHA Homeowner/Contractor Agreement Form. This form has 15 different sections that should be thoroughly understood by everyone involved with the loan.
Here I touch on some of the sections that I feel are very important:
The Permits 
  • The Contractor must provide a copy of the permit before he/she is paid.
  • The Contractor must provide a proof of payment to be reimbursed.
  • The owner must pay for any necessary easements
  • If a permit is required for the easement, it must be provided to the underwriter.
The Contractor 
  • The General Contractor must supervise all the work that is performed on the job. The Contractor is responsible for all Sub Contractors. Sometimes a borrower will want a specific sub-contractor such as a painter, that decision can not be made solely by the buyer. The General Contractor is responsible for all Sub-contractors and has the right to accept or reject the buyer's request. The Contractor is responsible for all work done on the project.
  • The borrower does not have to allow the Contractor to use as Sub-contractor that he/she finds objectionable.
  • Usually the Contractor will pick up all materials and have them delivered to the site. If this is not the case the you must make sure that you have a written agreement of what is to be done.
Removal of Debris 
  • Cleaning up the debris from the construction site is the responsibility of the Contractor right? Wrong, it should be spelled out who is responsible for the removal. There is a cost to removing the debris and if the costs were not in the first work write-up, it needs to be spelled out on this form. It can cause problems during the renovation phase. The city can fine either the homeowner or the contractor for any debris that is left on the property.
Solving Disputes 
  • This section is very important for the Borrower and the Contractor to understand. When and if a dispute arises, then the dispute may be settled by binding arbitration. Arbitration is very expensive and the Arbitrators are from the Construction Industry Arbitration Rules of the American Arbitration Association. Both parties can agree in writing to other methods to solve the problem, but there may be an Underwriter that will require the Arbitration. Arbitration can resolve problems faster than the Courts. Personally, I would not want Arbitration if the arbitrators are Contractors.
  • The work must begin within 30 days of closing, unless delays have been caused by the weather.
The FHA Renovation Loan Program is the most exciting loan program on the market, anyone involved with this loan should be educated. Educate yourself.

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Wednesday, March 14, 2012

Borrowers Should Not Be Their Own General Contractor On the FHA Renovation Loan Program

Borrowers think they can save money by acting as their own General Contractor when they are using the FHA Renovation Loan Program, but they can not unless they are a general contractor by trade. There are some small items of repair that the Underwriter will allow the borrower to do, one of them is painting the interior and on some occasions the exterior will be allowed.
When a borrower is allowed to act as their own General Contractor and complete the repairs. They must give a copy of their resume' for the underwriter to approve and review.
They must provide verification that they have enough funds in the bank to cover the cost of purchasing the materials. They will not be reimbursed until they can provide receipts for each item purchased. The Borrower must also show enough funds to pay any Sub- contractors, remember Contractors are reimbursed. Some Lenders may not allow the contingency funds that are on the Maximum Mortgage Worksheet to be financed into the loan, therefore the borrower will have to put up those funds in cash.
Some Underwriters may need the borrower to provide a time line to show how they plan to complete the project if they are approved to do the work themselves. Home Owners that want to do the work themselves don't understand that when they finish working their 8 hours on their day job, the last thing they want to do is go to a house that needs to be renovated and work another 4 to 6 hours. Finding help at the end of the day is another problem for home owner turned General Contractor, friends and family have worked the same 8 hours and the last thing they want to do is volunteer to help renovate a house.
Time is of the essence when working on a renovation project. If the work write-up states that the renovation will be completed on a certain date, then the Lender is going to look for that property to be completed on that date. Weather delays are acceptable. If the completion date is not going to be met, then the lender may or may not grant an extension. Delays in completion can cause the loan to go into foreclosure.
It is something to think about if you want to be your own General Contractor.
The most important thing to remember is to get educated if you want to use the FHA Renovation Loan Program. It really is the most exciting Mortgage Loan Program on the market; you can purchase and renovate or refinance and renovate all with one mortgage loan.

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Sunday, March 11, 2012

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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Thursday, March 8, 2012

203k Procedure

We are consultants & willing to help you in all aspects of this process. If you are coming to us first, that is not a problem. We will guide you to the lender that we feel can close your loan in the shortest possible time frame & pay your contractor in a timely manner to keep your project on target. Believe it or not that is one of the most important aspects of the 203k loan program. Getting paid promptly.

1) Find a lender and get pre-qualified... This is the logical first step as we need to ascertain the loan amount that you may qualify for or the maximum loan amount that keeps you at your comfort level. They may be two quite different numbers. We want you to feel comfortable that your payment is clearly within your budget. Many of our clients actually qualify for more than they want to make payments on & there is nothing wrong with that. In most cases the seller won't even accept your offer unless you have a "pre-qual letter" so they know you have already talked with a lender and started gathering your financial information. The lender can only process the paperwork after you provide it to them.

2) Get with one of our 203k real estate professionals to assist you in finding a property suitable to your needs, or alternate... you can also refinance your existing loan and get the money to rehab it in the same loan. Our professional teammates are going to show you several homes to choose from that need some degree of repairs. Not to worry as all those repairs are completed as part of the loan & rehab process. The great thing is that YOU get to choose the carpet, paint, and configuration of the property you are buying. I've always believed that a home isn't actually yours till to change the carpet and put your personality in the color schemes. If your real estate professional tries to steer you away from a 203k call me, please. Why wouldn't you want to gain additional equity in a home you are buying. You put down 3.5% but may end up with 20-25% equity, that what the 203k loan program is all about.

3) Call us at 1.877.207.6565 (customer service) to set up an appointment for a 203k Consultation. We will meet you at the site, go over the contracts and agreements that you will need to sign at the close of escrow. You will be given copies that you can take home & read at your leisure, mark up and get your questions answered by the lender or our staff. In addition we will make an inspection of the premises at this time. We walk through with you and determine what "must be repaired" then add your "dream list" of additional items specific to your needs & wants. An inspection report will be created which is the "cornerstone" of a good 203k loan project. We need to analyze what it will take to bring this property up to the FHA Minimum Property addition you may add any other work to the list of repair items within the guideline. You may choose to have a "home inspection" in addition to our property inspection. That is certainly your right. Many of our inspectors are home inspectors or licensed contractors who are capable of making that Home Inspection Report as well or you can choose someone else... remember that YOU are in control of the process.

4) Now we will go back to our office and create a "Job Specification & Bid Request". This is a list of the repair items that we intend to complete on your project. This "specification" is what will allow all of the contractors who bid this project to bid on the same list. This is important as you want them bidding "apples to apples". Up till now there is no real need for a contractor to have been to the site because we didn't know what work was to be completed.

5) Once the "Job Specification & Bid Request" has been created a copy will be given to the lender and another copy to the buyer or owner who is refinancing the property. It is technically the buyer's responsibility to see that the bid specs get out to several contractors for bid reality the home buyer typically will sit on the report and procrastinate and you'll loose precious time. Our software allows you to print the job specs with or without the consultants prices on the forms. FHA would like to see every bid come right from the contractor in a "blind bid" situation without any outside influence from the consultant. This will typically double or triple the time the contractors will spend getting the bid ready for the borrower. We have typically identified the borrower's choice for a contractor by this time and send it to them as well. If the borrower hadn't made a choice by this time we will send randomly to people on our "validated contractor" list who are willing to bid this project for the borrower. By the way, the appraisal can be ordered once the bid specifications are complete as that tells them the "scope of work" they need to determine value.

6) When the bids come back the borrower will choose the contractor. We are always available during this process to assist the borrower & offer suggestions as to which bid is the most appropriate for this project. It isn't always the lowest bid by the way, sometimes a bid comes in so low that it is clear they didn't understand the specs or too low to actually complete the project. The lender can close the loan.

7) The contractor is notified that the loan has closed so he/she can schedule the work to begin. Once the work begins the contractor will require continuing inspections to get progress payments for the completed work. The contractor or the home owner can initiate this draw request. The lender will initiate one if you don't do it in a timely manner.

8) This procedure will repeat itself until the project is complete.

Associates in all areas of the USA using our 203(k) software
1.707.812.7668 Fairfield CA
1.877.207.6565 works for all of our locations

Monday, March 5, 2012

FHA 203 K Mortgages - Full Rehab - Major Renovations

The Federal Housing Administration or FHA a division of HUD offers the 203k loan program. This loans primary focus is the rehabilitation and repair of single-family properties or a home improvement loan. This full rehab, major renovation loan offers affordable ways to improve an existing residential home.

Quick Facts on the this Loan:

This full rehab, major renovation loan can be used for rehabilitation and/or improvement of any one-to-four unit dwelling. It is designed to be utilized in one of three ways:

o To purchase a dwelling and the land it sits on and revitalize or rehabilitate it. For condos, only the interior repairs may be financed, no outside construction to the dwelling can be financed.
o To purchase a dwelling on another site and move it onto a new foundation on the mortgage property and rehabilitate it.
o For refinancing of existing dwelling and rehabilitating it.

To purchase a dwelling and land and to refinance indebtedness, the mortgage must be a first lien on the property and the loan proceeds must be available before the rehabilitation begins. If moving a dwelling to another site and foundation and rehabilitating it, the mortgage must also be a first lien on the property but the loan proceeds for moving of the dwelling can't be made available until the dwelling is attached to its new foundation.

How it all Works

With home foreclosures on the rise and lenders unwilling to finance repairs, the 203k loan allows repairs and improvements to be financed and the home may be appraised after the repairs enhancing value.

The borrow can finance all repairs, improvements and additions with the 203k rehabilitation loan and it acts as a regular loan, not a construction loan where you must find a conventional mortgage when the construction is complete.

Realtors also find this rehabilitation loan effective as property listings become more attractive if the buyers are aware of the rehab loan and that it is an available option for them.

Dwellings not eligible are properties built less than a year from the time of the request for the 203k loan. Income producing properties, non-residential, and cooperative homes are also not eligible with the exception of interior repairs or rehabilitation to a cooperative home.

This loan is perfect for bathroom and kitchen remodels, removing lead paints or asbestos to meet building standards, eliminate the old or obsolescent look of the dwelling, plumbing and heating repairs, and connections to public utilities like water and sewer. Additional eligible improvements are tile and carpeting, energy improvements, landscape, handicap accessible improvements, and roofing, gutters, downspouts, and new appliances.

Ineligible improvements for this particular loan include barbeque pits, dumbwaiters, and exterior hot tubs as well as saunas, outdoor fireplaces, and swimming pools. Satellite dishes and tennis courts are also considered to be ineligible repairs.

Where to Start

While HUD makes no loans it will work with your lender when you apply for a 203k full rehab, major renovation loan. These loans are effective ways to revitalize a property to enhance its value or for owner-occupied homes.

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Friday, March 2, 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.

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