Monday, July 30, 2012

FHA 203K Loan - Getting an FHA Construction Loan

With the current doom and gloom that is all around, most especially plaguing the housing and mortgage market, getting a new loan or mortgage is a lot more difficult. One of the most difficult loans to obtain nowadays is a home improvement and construction loan. But borrowers need not worry because the currently popular FHA loan has a FHA construction loan that you could get for your home improvement requirements.

They call this FHA construction loan as the 203(k) streamline program. This loan can be used to buy a fully furnished or refurbished house or make certain major repairs and upgrades to their home. But it is not limited to that because it can even be used to refinance a current mortgage.

One good thing about this loan is that it is not re-qualified because it has only one underwritten time which is upfront. There is also no minimum amount required for home improvement, repair or upgrade but they have set a maximum limit which averages for most states at around $35,000.

The 203(k) streamline program gives you two good options for interests: fixed and adjustable rates. You don't need even to worry if it would be too high because it would also just be the same like obtaining any standard FHA home loan.

On purchase of a fully furnished or refurbished house, the evaluation is finalized as "subject to" which means that it would be after the repairs or improvements are done. As for refinancing mortgages, two appraisals are needed. The first one would show what would be the current value of the property and the second one would indicate the value after all the payments have been done (including the interest payments).

But not all properties are eligible for a FHA construction loan most especially on refinancing mortgages. HUD REO properties, condos and manufactured homes are allowed including one to four unit houses. One criterion for eligibility is that the house should be 100% complete.

As for eligibility of FHA 203K on home improvement or upgrade works, one important requirement is that it would be finished within three months after the loan had been approved. Private lenders often require the borrower to have the repair or upgrade to be done by a licensed contractor.

Although they may not licensed but the borrower should be able to prove the expertise of the contractor on the work that needs to be done by submitting a resume that contains at least two references who would certify the credibility of the contractor.

It could also be the borrower itself who can do the work but just like with the contractor, the borrower needs to prove his expertise and experience on getting the job done. But before that, they need to submit the cost estimates including labor and the materials needed. This is important just in case the borrower failed to finish the work satisfactorily and a need to hire a contractor is imminent.

Getting a FHA construction loan would really be a big help to you in these days of turmoil.

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Friday, July 27, 2012

Have You Heard About FHA 203K Loans? - They Are Back!

Do you have clients looking for a "fixer upper" home? Does the home need repairs that your borrower doesn't have the cash to fix at closing? There's a solution!!

HUD has developed a new FHA insured mortgage program, called the "Streamlined 203k" Limited Repair Program that permits home buyers to finance up to an additional $35,000 of repairs into their mortgage to purchase and improve or upgrade the home before move-in or to refinance an existing mortgage and add up to $35,000 in repairs or improvements. With this new product, home buyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser. Unlike the standard 203(k) program, any FHA approved lender may originate a Streamlined 203K mortgage.

These types of loans close in 30 to 45 days- The borrower has 6 months to complete the repairs (you don't have to wait to close the deal after repairs are completed!!)

Purchase or Refinance!

Qualified Transactions = Multiple Marketing Channels:

o Purchase and renovate a home- Short Sales, Foreclosures, "Fixer-Uppers", Etc. Find a bargain for your buyers and help them turn it into the home of their dreams.
o Refinance- Work with homeowners wanting to renovate, remodel or upgrade.
o EEM Refi- Energy Efficient Mortgage Upgrades, including SOLAR OK.-
o Work with local remodeling contractors and EXPAND your referral network.

What is Renovation Lending?

o Renovation Lending is simply adding the cost of repairs and improvements into the mortgage to purchase or refinance a home.
o A Renovation Mortgage is a single, first lien position mortgage

Property Types:

o Same that qualify for FHA-Owner Occupied
o 1-4 units, including converting a 1 unit to a 4 unit or a 4 unit to a 1 unit.
o Condos and town homes- interior renovations only

Selling Points:

o Differentiate yourself from other agents and create a highly profitable niche
o Loan closes in normal time frame.
o Seller's are no longer responsible for doing repairs, good for buyers
o Customers can create equity, fast!

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Tuesday, July 24, 2012

Using an FHA 203K For Home Improvement

The FHA or Federal Housing Administration is an important part of HUD, which stands for the Department of Housing and Urban Development. Through the FHA, people are provided with a number of mortgage loans for new and existing homes, refinance loans, and even loans that can help with the repair and rehabilitation of a single family home. In the last case, the program known as the FHA 203K is available.

With the FHA 203K, property owners can take a home in disrepair and transform it. In addition to being beneficial for the owner, this is also beneficial for the neighborhood. The Department of Housing and Development has a number of goals but one of their priorities is to create an opportunity for homeownership by offering loans for people with poor credit, those with a low down payment, and owners that need money for home improvement. The goal of the FHA 203K is to help homeowners revitalize the community and neighborhoods by repairing and remodeling homes to improve the community environment. HUD sees this as a very important program to communities around the US.

The FHA 203K loan is a very important option and because of this most lenders provide full support. For lenders that have already secured this particular home improvement loan, the outcome has been sensational. With this loan, local and state housing agencies, as well as nonprofit organizations benefit too. In fact, many lenders will secure an FHA 203K loan, with a variety of other financial options that make rehabilitation easier for the borrower.

Many of the local and state home agencies that deal with finances have designed new programs wrapped around the FHA 203K loan. Then, depending on the agency involved, some will actually stay involved with the property during rehabilitation. With this loan, there is a commitment specific to lower income communities. HUD supports the Community Reinvestment Act and by offering FHA 203K loans, they are being supportive.

In addition to the FHA 203K loan showing communities that HUD is supportive, it also shows communities that the property owners are serious about cleaning up homes and areas that need rehabilitation. With this type of loan, a home can be improved in three ways. The first is for the home, as well as land to be purchased and rehabilitated. Second, the home would be bought and then moved to another foundation to be rehabilitated. Third, existing debt would be paid off and then rehabilitation would occur.

The 203K mortgage financing process is different in that it provides permanent financing. This means that the lender will not close on the loan and release the mortgage proceeds unless the property has been rehabilitated to the point that it will provide adequate loan security. Through this method, the lender is able to assess the risk and require improvements be made until their risk is low enough that the long-term mortgage can be completed.

This program takes away the use of numerous loans that previous home rehabilitators would have to take out on a home to repair it. With the FHA 203k, the buyer simply takes out one mortgage loan and uses that loan to purchase and rehabilitate the property.

Article Source:

Saturday, July 21, 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.

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Wednesday, July 18, 2012

203k FHA Loans For Home Rehabilitation

The FHA (Federal Housing Administration) a division of HUD (U.S. Department of Housing & Urban Development) has loan programs that help Americans own homes. They also have a program that has been created as a home repair and rehabilitation loan. It's actually a mortgage to purchase a property that is for more than the property is currently worth leaving funds to fix up the purchase. The home rehabilitation loans for home rehabilitation help a community by helping the homeowners maintain the properties they buy which can revitalize an older area.

FHA 203k loans for home rehabilitation can work in a few ways for an existing property consisting of one to four units. The property can be purchased (dwelling & land) and the FHA 203k loan can be used to repair and/or rehabilitate the purchased property. Another way in which the loan can be used is for a dwelling to be purchased and then moved to a new foundation on mortgaged property where the 203k loan will help rehabilitate the property on its new location. The 203k FHA loan can also be used to refinance mortgages while providing cash out to repair a dwelling. In all cases it gives people an outlet to be able to buy "fixer-upper's."

This type of loan is not a new concept; however, most people did not have any use for them and used home equity loans instead. When home prices were rising many home owners had enough equity in their homes to obtain an equity loan for home repairs. In the last couple of years as home prices decreased home equity loans have not been an option. For homeowners that want to fix up their home but cannot due to not having the extra money and not being able to fit the guidelines of a home equity loan anymore, the FHA 203k has become the answer. In our time of an economic crisis these 203k FHA loans for home rehabilitation work great for buying a foreclosure and being able to fix it up.

The amount of money that a FHA 203k loan user obtains depends on the repairs that are being done. The total of the loan will be based on the value of the property after the repairs and rehabilitation work has been completed. The amount allowed will come from an appraiser and/or home inspector and cannot exceed $35,000 for the repairs portion. The seller benefits from the government refinancing loan for home rehabilitation because they do not have to spend money for home repairs and the buyer benefits by getting a good buy on a property and then immediately having the money to fix it up.

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Sunday, July 15, 2012

Basic Requirements of FHA Loans

Federal Housing Administration Department (FHA) has helped many Americans buy new houses. They extended the benefits to such a level that low and middle income families were also able to qualify FHA loan requirements. The FHA loan requirements are much more feasible that any other conventional loans. Hence it is easily possible to get FHA home loans. But certain things are mandatory in order get a loan.

In case you are thinking of taking up a loan in order to get a house, then FHA financing has got a good deal to offer. It is very similar to any other lender. The borrower's credit will be checked, as this would be the indication for FHA down payments in the future. In case the borrower is having zero credit, he can still get loan. Unlike any other conventional loans, FHA loans lend loan if the borrower has a co-signer who has credit though they might not stay in the house. Many people in America have benefitted by taking loans in this way from FHA lenders. They also provide insurance protection to the lenders who provide mortgages to house owners.

FHA will check the income level when anybody applies for FHA loan. This is in order to verify that the borrower will be able to repay the loan installment regularly. FHA insurance is very helpful for those who might not be able to qualify conventional loan requirements. It is basically designed for first time buyers. The loan taken will be deducted considering the monthly and annual salary. The amount after deduction is the actual amount which is left at the end of each month. This indicates the amount the borrower can afford as mortgage payment.

There are a few basic necessities which are to be taken care of while applying for FHA loans:

• The borrower should possess a Social Security Number (SSN).

• The borrower should be a resident of USA.

• She/he should be of legal age so that she/he can sign the mortgage.

FHA expects the borrower to have a good history, so that they are satisfied that he/she will pay the loan installment. These rules are not as stringent as any other conventional loan lenders; hence making it easier for borrowers to get home loans. This makes FHA, one of the leading and most popular resources for borrowers when it comes to government loan options.

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Thursday, July 12, 2012

An FHA Loan Could Be A Recent College Graduate's Best Friend When It Comes Time To Buying A Home

A recent college graduate who is trying to secure a California home loan, or a loan in any state for that matter, needs a loan program that has flexible guidelines. An FHA loan offers that flexibility when it comes time for qualifying for the home loan.

Being that the graduate recently attended school, they are not required to meet the entire two year work history requirement that a Fannie Mae or Freddie Mac conventional loan requires. An FHA loan will allow school attendance credit towards the two year work history.

Being in the workforce full time for one year coupled with the prior year being in school satisfies the two year work history guideline, which again many conventional lenders of today aren't allowing. If the home buyer is working in the field in which they received their degree, that would help the overall chance of getting approved for a home loan, however it's not necessarily required. Lenders and underwriters may have differing views and rules when it comes to this scenario so it's wise to check first with your Loan Originator before you enter into a loan application to how this situation is viewed before they pull your credit report.

In addition, an FHA loan may allow for longer employment gaps. For example, if the graduate decided to take three months off after graduation prior to gaining employment, FHA is more lenient than Fannie Mae conventional lending.

Also FHA may allow non-occupant co-borrowers, conventional loans don't. If the bank of Dad and Mom runs dry after paying years of college tuition, and they aren't able to donate a cash gift toward buying a home for their child, they can go on the loan to aid in qualifying for the home loan even if they aren't going to be living in the property. Again conventional Fannie Mae and Freddie Mac loans do not allow this.

These FHA guidelines are nothing new but with today's ever changing Fannie Mae and Freddie Mac lending environment it's easy for real estate professionals to forget them and most consumers don't know these differing rules even exist. FHA is here to stay and consumers and real estate professionals need to remember that even with these looser guidelines, including accommodating lower credit scores, the interest rates are very close to what Fannie Mae and Freddie Mac conventional loans offer. So whether you're a college graduate or not, this is valuable information for all prospective home buyers to know prior to searching for a home to purchase.

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Monday, July 9, 2012

Book - Borrower's Guide

If you are going to purchase or refinance this year 
you really need to  read this book. It could save $$$
  • How to "Live Rent Free in America"
  • Beginning Investors learn how to buy "Mixed Use" and "Small Income Units" using the 203k loan program.
  • How to refinance an existing mortgage and get the money to fix your property. If you recently purchased the home you may be able to get the money to fix up your home without any more money "out of pocket" if under six months seasoning. How to save money on your next purchase on your appraisal and consultation fees.
  • A guide through the maze of paperwork associated with the 203k. You get to see what is in those contracts and view our comments on many of them.
  • If you are considering buying or refinancing you should do yourself a favor and take a look at the 203k. Easiest loan to qualify for, loan amounts recently increased in high cost areas to $729,750 so they can be done in most American neighborhoods.
  • Realtors - have you sold a home recently that needed work... do your client a favor and let them know about the 203k refinance & rehab.
CLICK Here to Order Your Copy

Friday, July 6, 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:

Tuesday, July 3, 2012

Best Mortgage Deals: 203(K) Renovation Loans From FHA

Want to add value to a home? Some of the best bargains are properties in need of repair. The FHA 203(k) mortgage includes the cost to purchase or refinance and make repairs in one loan. This allows home buyers to borrower more than the sales price in order to make repairs if value increases. Borrowers are guided in the process by a certified consultant.

Since the mortgage is government backed, credit terms are more flexible and loans are allowed up to just over 95% of the property's after-improved value. These loans offer competitive interest rates.

FHA Lending

The Federal Housing Administration (FHA) guarantees mortgage loans. Borrowers not eligible for non-government, also called conventional, financing may be eligible under FHA's more flexible underwriting guidelines. FHA also allows the seller to pay a part of they buyer's costs, allows down payment assistance from family, close friends or nonprofits, and has competitive interest rates.

The minimum borrower investment of 3.5% is a welcome contrast to the up to 20% some conventional loans require. The loan can also be used to refinance owner-occupied properties. The 203(k) loan is no longer available for investors.

The 203(k)

The FHA 203(k) offers the following advantages:
- Repairs are included in determining the after-improved value. The maximum mortgage is based on the home's value after improvements are done;

- HUD Certified Consultants oversee home improvement from cost estimating to inspections. Contractors sign a written agreement to comply with 203(k) requirements. Changes to approved work, if any, must be deemed necessary by the HUD Consultant and approved;

- The lender's escrow department disburses funds only after work is completed and inspected;

- Borrowers can finance up to six mortgage payments if the property is uninhabitable during renovation;

- The escrow department will ensure there are no mechanic's liens before final payment is made to the home improvement contractor.

- FHA loans charge mortgage insurance upfront in addition to a monthly premium;
- Contractors are paid after each stage of work is finished, usually in three to five installments, so they must have their own funds to get the work started in most cases;
- Underwriting can take longer due to the need for coordination between homebuyer, contractors, the Consultant, and special renovation lending teams;
- An extra appraisal and a HUD Consultant fee must be paid upfront. That is an $800 to $1,500 additional expense.

Finding a Lender

Since so much is involved, be certain your lender is familiar with 203(k) requirements. Ask your Mortgage Loan Officer for details. You can visit HUD's website,, and search "find a lender." Be sure the 203K box is checked on the Lender List page.

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If your interested in a FHA 203k loan contact Mike Young, the 203k guy!