Friday, June 28, 2013

Energy Efficient Mortgage and the 203k

What is all the whoopla about the EEM?

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

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

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

Tuesday, June 25, 2013

Contractor's Guide to the 203k Loan Program

This handy guide provides a remodel contractor all the information they need to get more construction projects going than you might want. It is on you to tell us to slow it down a bit if you get swamped with work. HUD has increased the loan limits across the country so this loan can be used in most any neighborhood in the USA.

With all of the foreclosures on the market that require some repairs the 203k is at an all time high volume. I'll show you how to avoid the pitfalls and gain access to the most powerful remodel product on the market today.

HUD increased the loan limits in "high cost" areas for a single family home to $729,750 and over $1.4 million for a four-plex. While the limits are lower in other areas this still lets you work in just about any neighborhood in the USA. Want to know what the limits are in your area go to the HUD website and type in your county and state.

I'll also show you how to take the work you already get and bump it up. I mean when a customer calls for a bath or kitchen remodel, I'll show you how easy it is to take that smaller job and turn it into a project while giving your customer a greater service and turn this into a whole house remodel project. Your customer gets a low cost rehab loan. A 5-6% interest rate is typical. 

Saturday, June 22, 2013

How to Become a 203k Consultant - HUD

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

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

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

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

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

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

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

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

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

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

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

In addition some of the lenders have forms unique to them which are added this same easy way... just a click and you have it.

Now the kicker - 15 CE Credit for our course with ASHI and CREIA

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

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

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

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

You can always reach us at

Wednesday, June 19, 2013

Asset Managers - Move your listings FASTER

Why not move your listings faster than your competition
That is the name of the game isn't it?
Actually it all comes down to KNOWING what it will cost to make the repairs in THIS home. If you have a "fixer" you are trying to sell and you have identified the cost to cure or make the necessary repairs then you have a salable home again.
No one wants to step into the unknown particularly a "first time home buyer" get your bank to cut loose with a little money to have us do a "feasibility analysis" which will identify the cost to make the repairs
1) to bring this home up to the Minimum Property Standards and
2) a second feasibility analysis to bring this this home to a "typical" upgraded condition.
By doing these two feasibility analysis I can assure you that your "hard to sell" homes will be easier to sell, will sell faster, and the buyers will have more information about YOUR listing than any of the other asset managers properties and therefore Yours sell faster.
I know most of you are selling 500-1,000 homes per year but as greedy as you can be, wouldn't you like to sell another 250-500 on top of that? By the way, you would be doing your employer a service by getting the "hard to sell" properties off their books faster as well. Everyone wins !
Who can do a feasibility analysis? That is easy, every FHA 203k consultant can do them. They don't all want to do them but FHA says if you are a consultant you MUST offer that service.
What does it cost for this service? I can't speak for other consultants on this issue but we have a set fee of $300 for the first unit on a project & $50 each for units 2-4. If you order both at the same time, a bare bones feasibility for a "first time home buyer" who may be on a very tight budget then that is all you need.
Then if you order the "fully updated" feasibility at the same time we will do both of them for a flat $500 for the two for a SFR plus $75 for units 2-4. YOU save your client $200.
Some of the agents who handle lots of REOs for asset managers are finding that even if they pay the fee they move many more houses and that is what they are supposed to do.

Sunday, June 16, 2013

Use the FHA Mortgage Specifically Created for Home Improvement

Almost everyone knows about FHA mortgages. They are tailor-made for first time homebuyers and others with less than perfect credit or other financial issues. You don't have to be low income or have bad credit to use FHA, but generally the loan limits prohibit high priced homes.

What you may not know about FHA is that there is a special loan program designed to provide the funds to buy or refinance your home PLUS additional funds to make repairs or improvements.

This FHA mortgage is called the 203K and the K is the operative part of the name. Not every lender participates in the rehab loan program, but the major national lenders do. If the loan officer you contact is unaware, then call the corporate office and ask them to direct you.

The FHA 203K loan program calls for an FHA inspector to go over the house, using the plans you gave him. Before you get to this inspection phase, you should be working with a general contractor who understands how to provide plans and specs for a project. Plans and specifications are standard in the contracting industry for anyone managing a project >$5000, which is the minimum rehab amount for this loan program.

The FHA inspector will decide if the project is feasible, depending on whether there is additional work required to bring the property up to code, and whether or not the property will appraise for enough to make the project "worth it". FHA is willing to lend based on the after-rehab value and will even stretch that value a little in order to get houses brought up to code.

Once the lender is happy with the valuations, the plans and specs, and the inspector's report, your loan file will be reviewed by an underwriter specially trained and certified in rehab loans. Your credit and finances do not have to be perfect to be approved, but the creditworthiness and qualifications are similar to a regular FHA loan.

One of the benefits of a 203K is that all costs can be added into the project. The fees, permits, closing costs, etc. are all added up and your downpayment on the purchase is calculated on the total. If you are refinancing instead of purchasing, the amounts are totaled the same way, but you might already have enough equity in the home to avoid coming up with any cash.

What's next? Once approved, the loan closes and the rehab portion of the money is escrowed by the lender. The contractor submits requests for payment and each phase is inspected. As soon as the work passes the inspection for completion, the contractor is paid. You can not go back to the well for more money, so your initial plan must be a good one. A contingency fund is usually added in during the total project calculation.

This contingency fund can only be used to fund hidden repairs that were not evident during the initial workup. Any remaining funds in the contingency are used to pay down the mortgage at the end of the project.

The FHA 203K mortgage is not a "piece of cake", but if you do not qualify for low cost money at the local home improvement equity loan bank, then it is very definitely worth looking into.

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Thursday, June 13, 2013

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.

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Monday, June 10, 2013

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.

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Friday, June 7, 2013

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.

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Tuesday, June 4, 2013

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.

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Saturday, June 1, 2013

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.


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.

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