Wednesday, July 31, 2013

Myth #1 - Dispelling the Myths of FHA 203k Loans



MYTH #1 - 203k loans are only for properties that need repairs. Simply not true. Watch this first video of a series dispelling five popular Myths of FHA 203k lending.

Sunday, July 28, 2013

Become Part Of A 203k Team

I've always looked at the 203k as a team sport, even when I first got involved with it. When we put out our audio tapes in 1998 we even discussed it.

You are only as good as your 'team' in any case. If your consultant can't write a good report, the lender won't have much to work with and on the other hand if the lender can't get the loan closed it doesn't matter how good the 203k consultant writes the report.

This is true of the rest of the team as well. Your teams each should have a Lender that can close an FHA loan, even a 203b quickly.

Our trained 203k consultants will provide 100% of the 203k portion so the lenders can take our MMW and use it to help them fill out their form... it is their responsibility but we try to make it easier for them.

If we all do our part of the project and then pass the baton to the next team member this frees us up to get the next project started.

Example: A 203k loan may begin anywhere by any one of the team members. We quite often get calls from our websites or the HUD website from a borrower... we immediately asses the situation and more than likely we'll send them to a lender to get that process started.

They may already have a property, that is okay, we still need to get that lender take on the borrower to be sure they are credit worthy. Not wanting to waste time or the borrower's money we need to verify they have the ability to get the 203k loan going.

If they don't have a property then we suggest a realtor or agent to help them find one in a neighborhood of their choosing.

We may actually start consulting to determine what type property they might want. There are several possibilities in this realm.

Once they locate a property suitable for their needs we set up a 203k consultation and inspect the property to create the 203k bid specifications.

Once those 203k specs are complete the borrower should look them over to be sure everything looks like they want it. Then they go to the lender.

The lender takes the 203k specs and provides that information to the appraiser and the appraisal is completed with an 'after improved' value. Once we reach this point the loan should close within a week or so typically.

Once the loan closes the borrower needs to get that information to the contractor so they can get that project in their schedule.

This is an important step as this is the only way the contractor has of learning the loan has closed.

They have up to 30 days to get their first draw inspection but in most cases they will have someone start long before that. In many cases they will start within a few days of your closing the loan.

We look forward to helping you build your 203k business.

Know that this is much more than just 203k, you will be trained in all renovation loan products that you can also consult on.

You will have access to our marketing materials and power point presentations to increase your "Referral Partner" Base too.

We have referral partners that provide a considerable amount of work for us in the FHA 203k loan program.

We'll show you a way to finance 80% of the pool repairs or even add a swimming pool to a home that doesn't have one.

To place an order go to www.my203kconsultant.com 
Mike Young, 203k Consultant
1.707.812.7668
Cell phone 1.704.451.1599

We now have offices in

Charlotte, NC
Columbia, SC
Charleston, SC
Denver, CO
Detroit, MI
New York, NY
Los Angeles, CA
Santa Barbara, CA
Austin, TX
Dallas, TX
And we are growing our business!

Thursday, July 25, 2013

Can You Move a Home From Another Site Using the FHA 203k Loan?

I've always found it interesting to see a home going down the street on it's way to another site, just waiting for someone to throw out some dish water out the back door... lol , not really

In the case of moving a home from one site to another several things must be present to qualify for a 203k loan.

1) The house being move must be on it's original foundation. It can't have been moved already to a storage sit while awaiting a lot to move it to.

2) HUD engineering must observe the home on the present site prior to the move and at the new location once sit & bolted on the new foundation.

3) The mover's insurance must cover the home during the move. Looking at the contract this mover has it suggests the borrower is responsible for damages up to $2,500, I don't think this will fly with HUD but apparently the borrower is willing to accept that responsibility. We'll see.
Once the home is bolted to the new foundation a draw payment can be made that covers the moving expenses as well per the 203k loan program.

The one we are doing right now is being moved onto a site that has a well and needs a septic system. In all cases the well and septic work must be part of the first draw or you may find you are waiting until it is. This sounds logical but years ago I was working on the first draw on a stick built home for a lender client. The home had a new foundation, the sub floor was installed, the well worked, and when I asked about the septic system was informed they hadn't started that yet.

I reported to the bank and told them I instructed the borrower to have the septic system ready for inspection at the next draw (not an FHA loan by the way). He agreed. I went to the draw 2 inspection to find out that they couldn't "perk" and a new "hillside" septic system is being installed at an additional cost of $70,000. I was shocked that they didn't have to pass the "perk test" prior to getting the building permits issued. Who would have guessed?

4) Permits is another issue, if you need permits on a job for the work that you plan to do... get them early. It might even save you a fine. I once had a fixer we had just foreclosed on. I had the property secured and hired a guy to mow the lawn. He called me and told me the building inspection department was pissed off at me and red tagged my building telling him he must STOP work and get off the property. 

I immediately went to the building inspection department and told them of the incident. They looked it up and said "yes, here it is with a note that you are hereby fined and must pay double permit fees".
I said okay how much do I owe you... they said it isn't that easy we need to make an appointment to visit the property to see just how much work has been done... I said bring it on.. so far we just mowed about half the front lawn. Some of these inspection departments are just a little wacky.

The inspection cost me $25 and the inspector was the same one who 'red tagged' the property. When she made the inspection and found no work had been done she was a little red faced. I asked her why she sent the lawn mower guy away.. it isn't typically permitted. She got a little more red. Life is fun, then you...

Monday, July 22, 2013

Important Notice from ASHI

ASHI LEGISLATIVE ALERT
 
IMMEDIATE ACTION REQUESTED
 
 Action Item: Please contact your U.S. Senators to support retention of the Home Mortgage Interest Deduction (HMID)
 
This is an update - and a further call for grassroots action by ASHI members -- of a May 6 Legislative Alert to support full retention of the Home Mortgage Interest Deduction (HMID).
 
HMID is a key element in federal policy that triggers home inspection revenue opportunities for ASHI members. ASHI vigorously supports retention of this valuable federal policy.
 
The recent event: Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) have sent a "Dear Colleague" letter to their fellow Senators to formally elicit their suggestions and priorities for comprehensive tax reform.
 
The Baucus-Hatch Dear Colleague contains this transparent suggestion: "...we believe it is important to start with a "blank slate"-that is, a tax code without all of the special provisions in the form of exclusions, deductions and credits and other preferences..."
Clearly, this phrase is an invitation to overlook the precedent and value of HMID -- or support gutting it by moving it down the priority list by merely omitting it as a priority in the record.
 
ASHI's view is that such an outcome would have serious negative business impacts for ASHI members. ASHI is fighting such a negative result accordingly.
 
We urge you to contact your U.S. Senators by telephone or letter to state your views regarding HMID.   Please state your own views -- but see the text of the ASHI policy statement at the end of this Alert, which may assist you in making your contacts.    
 
How to find contact information for your U.S. Senators: Go to http://www.contactingthecongress.org/. Type your address where prompted and click "Submit it". You will see a display of your officials, including Senators. To call your Senators, dial the Senate switchboard at (202) 224-3121. Ask to be connected to the Senator you would like to reach. Once connected to the office in question, tell the receptionist that you are a constituent, and you would ask the Senator to tell Senators Baucus and Hatch your opinion on retaining the Home Mortgage Interest Deduction.  
 
Thank you for your grassroots help in protecting the Home Mortgage Interest Deduction.
 
  
Statement of The American Society of Home Inspectors Regarding The Home Mortgage Interest Deduction
 
I am writing on behalf of the American Society of Home Inspectors (ASHI), representing nearly 6,000 home inspection professionals across the United States and North America. 
 
ASHI strongly supports the retention of the home mortgage interest rate deduction (HMID) currently allowed under the U.S. tax code. 
 
Further, ASHI opposes strategies that would diminish the value of the homeownership incentives offered by the HMID, particularly strategies that would limit total itemized deductions for mortgage interest on first and second homes, currently allowed under the U.S. tax code. 
 
 ASHI's views are predicated on 1) the impact, relevance and utility of the HMID in incentivizing home ownership in the United States, and 2) the economic/jobs impact on the professions and industries that are supported by the homes sales economy. 
  
The number of U.S. taxpayers whose abilities to establish and maintain home ownership in part due to the HMID is staggering. 
 
A recent evaluation prepared by the congressional Joint Committee on Taxation for consideration by the U.S. Senate Committee on Finance determined that, based on 2009 tax returns actually filed by U.S. taxpayers, approximately 36.5 million tax returns took advantage of the itemized deduction for home mortgage interest, claiming deductions for $420.8 billion of home mortgage interest. 
 
In fact, JCT found that total claims were even higher when considering related deductions such as for deductible mortgage points and qualified mortgage premiums. 
 
Clearly, the homebuying public constituency making use of the HMID represents a huge portion of the total consumer marketplace in America.  The HMID has become an institutionalized factor in the home realty sales market whose disappearance or diminishment would have widespread negative economic impacts.  
 
The United States is hardly alone in recognizing the broad economic benefits of home ownership and stimulating home ownership via tax incentives.  Among the 33 countries that are members of the Organization for Economic Cooperation and Development, 18 provide a deduction for mortgage interest.
 
Further, the U.S. is not extreme in its tax policy supporting home ownership, ranking roughly in the middle of OECD countries. 
 
The HMID deduction may lower the cost of capital required to purchase a home and service the debt by as much as seven percent by one estimate, allowing U.S. homebuyers to buy somewhat larger homes for their family enjoyment, or to use the savings for other purposes that benefit their interests or grow the economy. 
 
Of course, a large portion of the realty-related economy depends on the stimulating effects of the HMID, including realtors, mortgage lenders, construction, renovation and repair contractors, appraisers, and of course home inspectors. 
The United States continues to suffer a persistent slump in home sales and home ownership that exerts a depressive effect on the overall realty-related economy.  A diminishment of the HMID would only serve to continue, and perhaps exacerbate this pervasive problem, with the appurtenant negative impacts on the professions such as home inspection. 
 
In sum, ASHI suggests any reduction in the effective value of the HMID to U.S. taxpayers would be the wrong move at the wrong time, with multiple negative impacts across the American economy. 
 
We urge the U.S. House, Senate and the Obama Administration to fully support the current tax treatment of the HMID, and to table any suggestions to the contrary. 

Friday, July 19, 2013

How to Get an FHA Loan



The Federal Housing Administration, FHA for short, provides mortgage insurance on loans made by FHA-approved lenders throughout the U.S. Here's how to get your FHA-insured loan.

Tuesday, July 16, 2013

I'm A Contractor, Why Should I Learn About The FHA 203k Program?

If you have all the work you need already then maybe you don’t need to know about the FHA 203k loan program but there are allot of you out there that have been buying my eBook “Contractors and the 203k” indicating that many of you are becoming aware of this program. Why is that? Simply put “more business” than you can handle.

When I take on a new contractor into our “203k Team” we ask one thing of them “Stop us before you get too much work from this program”. The last thing any of us want is for you to get a bad reputation for not being able to get these projects to completion in a timely manner and we have had some that don’t know when enough is enough until we start getting bad service. So… please just pull back a little when the time comes and then open the spigot again when it appears you are about 3-4 weeks from needing more work.

There are two types of FHA 203k loans. I will describe the differences below and YOU need to know them and choose the right one for your circumstances:

1) Full or Original 203k (started in 1961)

This program uses a 203k Consultant to create a bid specification. That specification is sent to you, the contractor for your bid. It is typically a blind bid situation. In some cases the contractor has already put in a bid for the work they think will be required but in many cases they aren’t aware of the HUD Guidelines so they may miss a few things but overall this seems to cut down on the time it takes to close the loan so it isn’t all bad. If the borrower has several clients come out and bid the project prior to seeing us to create the “scope of work” it can be a mess. As much as the client tries to have them bid the same project if you don’t write it down each contractor will have their impression of what they thought you said and each bid will be slightly different and the client will not have a clear bid that they can use.

I prefer to be the first one on the job to create the specification of repairs. I also will bid the job (never will do the work, just bid it) so the client has an expectation and we all know this project is still viable.

There is no “up front money” for this program. The contractor must be well healed and have credit or money or both to get the project started. Since each draw must be no more than 30 days from the prior one the contractor should have enough money to carry his/her business, materials and labor for that period of time plus whatever they need to run the rest of their business. This program allows for interim draws and you can get partial payments for anything that is partially complete but only for completed work. Some lenders will follow the guideline and let you get money for cabinets and finished flooring up having it delivered and stored on site. Some lenders will advance 50% of the window and cabinet materials money only when they are custom sizes and the check may be made out directly to the cabinet maker or window manufacturer.

This has been and can be a difficult situation for a small contractor or a contractor growing too fast. They need, heck, we all need “cash flow” which is the life blood of every business.

2) Streamlined “k” (started in 2005)

This program was intended to make the program easier to use for the majority of the lighter renovation projects. The significant thing with this one is that it cannot have any “structural” component. It is intended for smaller projects and though the maximum construction costs are limited to $35,000 per the Guideline in reality it is only $30,000-34,200. If you come up with Streamlined “k” loans where the work is $35,000 and your lender only does the Streamlined “k” you will be disappointed most of the time. The $35,000 must include the costs and fees associated with it. The $30,000 figure is due to the requirement of many lenders to maintain a 10% contingency reserved which takes a $30,000 right to $33,000 immediately.

The big thing here is that there is “up front” money for the contractor of 35-50% of the construction cost. The project must be completed in no more than 60 days, and there is only one final draw at the completion. No other interim draws.


Mike Young, 203k Team Leader Mike ready for your 203k order

With offices coast to coast and HQ now at 
1351 Oliver Road, Fairfield, CA 94534 
707.812.7668

Saturday, July 13, 2013

Borrower's Guide to the 203k

203k Borrower's Guide

Now you can get the money to purchase or refinance your home AND "fix it up" all in one low interest loan.

This handy guide provides you with all the information you need to be knowledgeable when you go to purchase or refinance your next home or small income property using this unique rehab loan product. HUD has increased the loan limits so this loan can be used in most neighborhoods in the USA.

It is my opinion that every home sale or refinance made within the FHA loan limits should be a 203k. Your home isn't really yours till you replace the carpeting and repaint. Why would a real estate professional allow a client to purchase a home with a leaking faucet or a bad roof... this loan substantially reduces their potential liability on every sale. All around this is a good deal for everyone involved.

If you have bought or sold a home recently that needs work you should consider the 203k. You can now refinance it and get the money to repair it with a good likelihood of no more money out of your pocket.

For more information, please visit: 203konline

Wednesday, July 10, 2013

Mike Young: What’s My Line? | FHA 203k Consultant

Photo of Mike Young


Who is Mike Young and what does he do?

Mike Young is a FHA 203k Consultant. 




 

What does an FHA 203k Consultant do?

  • Meets with clients and “consults” explaining the program
  • Reviews the contracts and procedures so there are no problems during the course of construction
  • Makes the FHA 203k compliance inspection to determine what it will take to bring the structure up to the MPS (Minimum Property Standards). This includes mandatory repairs such as ceiling insulation, caulking, weatherization, grading, etc.
  • Recommends contractors and lenders if they client does not already have them selected
What is the difference between an FHA Consultant and a Home Inspector?
 
A  home inspector and a 203k consultant can be, and quite often are, the same person. There is really no difference in the home inspection and the consultant’s 203k compliance inspection.

The inspections can be the same inspection. The home inspector quite often creates a “deficiency report” that can be the basis of a 203k report as well.

A typical home inspection might take 3-4 hours and a typical 203k compliance inspection might take 1-2 hours. During that time the home inspector will find deficiencies and suggest further inspections by the appropriate trades persons  and rarely is allowed by state licensing to “price the work”.

On the other hand the consultant does just that, they determine the issue, determine the repair, create a “scope of work” or “scope of renovation” and provides typical costs to repair those items. This is in direct violation of most state licensing “standards of practice” for home inspectors thus the difference between a consultant and a home inspector.

Mike Young can help any buyer in any state, in any city or town.  Mike is licensed by HUD to be an FHA 203 Consultant in all states.
 

Do FHA 203k Consultants charge a fee?  

The answer is, Yes. Nationally a typical fee for a 203k consultation is between $600 and $700, plus mileage. That isn’t very much for the responsibility assumed. The fee can range from $400 to $1000, plus mileage, for the consultation, but on larger projects additional fees may be incurred. Of course, one would need to contact Mike Young directly and get a fee quote specific to their project.  Clearly, one size does not fill. 

Are there any pitfalls or downsides to FHA 203k loans? 
As with anything in life, even with the best laid plans, things may not go according to plan. If you are having issues with a 203k loan anywhere in the USA contact 203k911.com for some direction and resolution to your issues. The best course of action is to first hire a consultant to ensure the project does go smoothly.

The Mike Young Team represents a group of FHA 203k and Fannie Mae HomeStyle Renovation consultants specializing in renovation loans nationally. No job is too big or too small for Mike and his team.  They recently helped a person in KS who couldn’t find a consultant due to state laws being so restrictive.  They were able to help the person's lender get the loan closed with little delay.

Another person called from CT asking if they could move a historic type home from a lot in VA to a new location in CT. The home was to be placed on a barge and taken to the new waterfront lot in CT.

The 203k program is amazing. Open your mind to the possibilities, or contact The Mike Young Team and they will open it for you.
 
Mike Young: What’s My Line?  |  FHA 203k Consultant  by Kathleen Daniels, San Jose Homes for Sale - San Jose Short Sale Agent - 408-972-1822

Article Source

Sunday, July 7, 2013

What is a Consultant?

I get approved consultants that call interested in our Award Winning software... One that called the other day thought our software provided way too much paperwork, much more than they needed or wanted. YIKES! Are they really consulting? NOT.

Our trained consultants obviously do a lot more for our clients than our competitors. We provide 100% of the paperwork that, when added to your 203b paperwork, is ready to submit to underwriting. Since the MMW is required to be filled out by the lender you merely take our numbers and input them on your MMW. Lenders should insist that your consultant has had training from us or gets their CE from us. Continuing Education is essential in any industry.

For more information please visit 203konline.com

Thursday, July 4, 2013

Happy 4th of July!

Have a Safe and Happy 4th of July!!

"Let every nation know, whether it wishes us well or ill, we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, to assure the survival and success of liberty."

~John F. Kennedy


Monday, July 1, 2013

Why You Should You Use a Consultant on Streamlined "k"s ?

Simple answer is that you don't always know when it is a Streamlined "k" or a Full. We had a glazier buying a home... he felt that he could repair the broken windows so they had the contractor bid on the roof, carpeting, & new kitchen leaving off the broken windows. The appraiser called the broken windows tripping this into a Full 203k requiring a consultant. Had they merely mentioned this ahead of time this would have been a Streamlined "k".

Another one we just saw appeared to have structural issues in and about the garage but turned out that we were removing the garage which then removed the structural issue & left it a Streamlined "k". Had they wanted to repair the garage it was a Full 203k.

Having your consultant do the inspection on the property can let you know sooner that is one or the other, & in some cases save it as a Streamlined "k"