Tuesday, October 29, 2013

Bring New Life to a Home With a Home Renovation Loan

You have your heart and mind set on a mid to late century split level with a large lot not far from the interstate and downtown. But your friends and family feel a new home is a much better deal as they warn you about termites, faulty wiring and leaky pipes. You could go with a brand new home, but the 30 to 40 minute commute overwhelms you. Don't give up on your plans; you can make an old home feel new again! With a home renovation loan you can purchase and fix up your new home with one loan. Now you can have it all: the nice home, the awesome neighborhood and the short commute to downtown.

First, you need to know your loan options.

There are 4 types of home renovation loans:

Streamline FHA 203K

This loan is for primary residencies that need limited repairs of less than $35,000. The 203K requires as little as 3.5% downpayment of your acquisition cost. So if you get a $200,000 loan, your downpayment after the contract price and repairs is $7,000. The Streamline 203K is great for folks who have a lower credit score of 640. There's no consultant to manage the repairs-this loan is for "streamlined," and it can be occupied immediately after closing. You can have up to three contractors that need to be licensed for any specialty work. The contractor will receive one draw in the amount of 50% of the total contract and then the final payment balance upon work completion.

Consultant FHA 203K

This loan is typically used for homes with repairs of over $35,000 or that require structural repairs for the foundation, well or swimming pool. There should only be one general contractor (GC), but there can be up to three contractors. The main difference between this loan and the Streamline is you need to hire a HUD-approved consultant to work with the GC to protect the buyer's and lender's interest and makes a draw schedule so that the renovation funds are disbursed properly. Contractors get no money up front, and their fee is based on work completed. The HUD consultant will know what money to draw out to the contractors based on the amount of work completed.

Homestyle Renovation Loan

This is a conventional Fannie Mae loan requiring as little as 5% down for primary residences, 10% down for a second home and 20% down for an investment property. If you put 20% down, you do not need to have mortgage insurance. This loan works like the 203K and has a streamline and consultant category.

Homepath Renovation Loan

This loan is for foreclosures owned by Fannie Mae and it can be for a primary residence, a second home or an investment property. You can put 3% down for primary residences with no mortgage loan, but for investment properties you'll need 15% down.
Most people don't know these loans even exist, but now you do! The best part of these home renovation loans is that you're working with a team and you don't have to renovate a home on your own dollar.

http://www.jasonbgraves.com Article Source: http://EzineArticles.com/?expert=Jason_B._Graves

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Saturday, October 26, 2013

The FHA 203(k) Rehabilitation Mortgage Insurance Program - The "Fixer-Upper" Loan

Under Section 203(k) of the National Housing Act, the Federal Housing Administration (FHA) offers mortgage insurance on loans issued by approved FHA lenders to help borrowers purchase and rehabilitate a home. The home should be one that the borrower plans to use as their primary residence. This same insurance program also covers cash-out refinance mortgage loans whose proceeds will be used by the borrower to rehabilitate their current home.

Why the "Fuss" About FHA 203(k) Loans?

Trying to buy a "fixer-upper" home and rehabilitate it can be a very complicated process for borrowers. It typically requires taking out multiple short-term loans with high interest rates. These loans often require a balloon payment when they become due.

The FHA created Section 203(k)-insured loans to address the needs of such borrowers wanting to rehabilitate new or existing homes. This program makes the process of buying and fixing up a new home much simpler by providing the borrower with one long-term mortgage loan that covers everything.

How Do Section 203(k) Loans Work?

There are several basic requirements for a home loan to be covered under Section 203(k). The home must be at least one year old, and the planned rehabilitation must cost a minimum of $5000. The property value of the home must fall within the FHA loan limits for that area of the country. FHA maximum loan limits differ for each county, borough, or county in the state where the property is located..

When a 203(k) loan is closed, some of the money goes to pay for the purchase or refinancing of the home. The remaining money is placed in an escrow account to pay for the work on the home. Funds from the escrow account are paid out as rehabilitation work is completed.

Work Covered By Section 203(k)

Many types of improvements can be covered under this program. They include but are not limited to:

  • modernization of the home
  • correcting health or safety hazards
  • repairing or replacing plumbing
  • repairing or replacing electrical
  • repairing or replacing roofing
  • repairing or replacing floors and floor treatments
  • landscaping and other work to improve the appearance of the property
  • energy efficiency improvements

Other types of home improvements are covered. You will want to consult your lender to find out if your particular rehabilitation needs can be covered under the program.

Who Can Apply?

Anyone can apply for an FHA 203(k)-insured mortgage as long as they can afford the monthly house payment based on their debt-to-income (DTI) ratio. To apply simply contact and FHA-approved lender. Many services are available online where you can fill out a single form and get referred to multiple lenders allowing you to compare multiple rates and loan offers.

J Hodson operates FHA-Loan.org, an online resource for borrowers seeking information about FHA loans. There you can find more information on FHA 203(k) loans including the specific FHA maximum loan limits that apply to the particular county, borough, or parish where your property is located.
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Wednesday, October 23, 2013

FHA Refinancing - Need a Home Improvement Loan?

You hear it almost everyday that getting a mortgage is getting harder. One of the hardest loans to get right now is a construction or home improvement loan. Once again FHA is helping borrowers with their home improvement needs.
FHA has a program call 203(k) streamline. This program can be used for refinancing a current mortgage, or to purchase a home and make upgrades or repairs to the property all under one single loan. Unlike conventional mortgages it is not re-qualified, as it is only underwritten one time, upfront. There is no minimum amount for the repair cost; however the maximum is $35,000.
The FHA 203(k) offers both fixed and adjustable rate options, and the interest is the same as a standard FHA loan. On a purchase the appraisal is completed as "subject to" meaning after the repairs and or improvements are completed. On a refinance two appraisals are required. The first appraisal will reflect the current as is value. The second appraisal will reflect the subject to completion value.
Eligible properties include one to four unit residences, including HUD REO properties. Manufactured homes, and spot approval for Condos are also allowed. The property must be 100% complete - no partially built homes.
Contractors and repair criteria

All repairs/work must be completed within three months of the closing date. Repairs must be completed by a licensed contractor unless the borrower can demonstrate the required expertise. The contractor making the repairs does not have to be a licensed general contractor; however, he or she must provide a resume along with two references. 
Self Help (borrowers completing work)
The borrower is required to have the necessary expertise and experience to complete the work in a satisfactory manner (ie: borrower is a licensed plumber and will complete that portion of the work). The cost of labor is included in the repair / rehabilitation cost in case the borrower is unable to complete the work and a contractor needs to be hired. The borrower must provide written estimates of the repair / rehabilitation cost as well as written estimates from the suppliers of the materials.

See more FHA loans [http://www.midwestfhaloans.com/fhaprograms] DClark Sr. Loan Officer Cole Realty and Lending, Inc. [http://www.midwestfhaloans.com]
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Sunday, October 20, 2013

What is the Maximum Number of Draws You Can Get on an FHA 203k loan?

That depends on who you ask... shouldn't be that way but it is. It should be per the HUD guideline but most lenders dont' know how to read the guideline except the portions or parts that they want to enforce. Now even HUD representatives have succumbed to the popular myth there are to be only five... read on

1) They all quote the guideline as "no more than 5 draws will be allowed". If they read the entire paragraph is says "on a project size of $10,000" just before it limits them to five.

The guideline actually suggests 4 draws and a final for smaller projects

The fact is that they will be whatever they are.

There are people at Wells Fargo that know we can't do a $500,000 project with five draws in most cases. If you make the request you can enter eight or ten right up front and include them in the loan amount.

Prospect Mortgage says they will go 6 if the 6th is the final but threw out a $300,000 project when the contractor asked for ten draws which was a reasonable request. They also told the client that they need to find a contractor that is more suitable for this size project.

The system is set up for a 1.5% "supplemental origination fee" which is intended to cover the draws and other related expenses on larger projects. In the case of a $300,000 project Prospect would have been provided $4,500 to set up the account and make those payments and would rather loose the loan, and did btw. 6 draws means $750 per draw check, versus 10 draws which would have only been $450 per check. Considering most accountants indicate it costs about $25 to actually run that check... you decide. But if you are going to require more than 6 draws take your loan elsewhere is pretty much the message they sent load and clear.

Bank of America on the other hand also does six if number six is the last one. This really gets good. If you have a $500,000 construction cost on a project and ask for 10 draws you will not get them here either. In fact if it takes six they will do them in six draws like Prospect Mortgage provided the sixth one is the final. However if it looks like there will be seven draws they will cut it off at five... they want all the money then moved to the contingency and it becomes a bit if a test to draw the rest of the money without the benefit of a draw request. They want everything listed on a change order and drawn as change orders from here out. What a nightmare. It reduces the accountability so to maintain that accountability we actually continue using the draw froms and then move the info to the change order form.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation".

Thursday, October 17, 2013

I'm a Contractor, Can I Work on My Own 203k Project?

My first question would be what kind of contractor are you? Then, is that the kind of contractor that's needed on this project?

If your project requires a general contractor, and you are a general contractor, then you likely can do your own work. But do you really want to? I know it sounds like a good idea because you think you can save yourself money. In reality it takes you away from what makes your money.

Your project will take a backseat to every other paid job you get a chance to work on. I'm sorry, that's just the blood reality of it. You also have the paperwork nightmare. The lender will require you to keep very careful records as to who you paid for what, much more than if you just were contractor on someone else's 203K project. You will never be paid for your own labor.

The good thing is you can get paid for labor paid out to others, but you have to prove it.

If you want to do self-help and be your own contractor, and put up with all the paperwork, we still have to create a scope of work with enough money, labor and materials, to complete the project with a different contractor. This is done just in case you flake out on us and don't get the job done in a timely manner. We will then have the money set aside to complete your project in spite of you. So what have you really gained? Your borrowing the money to complete the project. You complete the project and don't get labor for yourself. The extra money pays down on your mortgage, but your payment doesn't change. What have you really gained? Was it worth it?

So you had a $100,000 project, and you saved your 20% profit and overhead. You're fooling yourself, because the overhead was still there, and you worked for free. In reality you save maybe 10% which would your profit on this project. You didn't save any overhead because it cost you to hire people and manage them. So you put yourself through all of this extra work for nothing. Had you taken on another job that would've paid you labor and materials you likely would've been better off. Then you and your spouse could have been angry at the contractor who didn't finish the work on time, and you to can be on the same side, the winning side of this project. On the other hand had you done the work your self, your spouse is the only one that can be angry at the contractor, and who is the contractor? YOU!

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation".

Monday, October 14, 2013

203k Contractor's Guide Now Available

Contractors can actually get business within a few weeks and lots of it by using the techniques in this eBook.

Learn the secrets of getting more 203k work.

Most of it is paid 35-50% up front and the balance upon completion if you concentrate on the Streamlined (k) and if you want larger projects you will work the "Full 203k" program (sorry no upfront money on this one)

The last builders group we talked to was shocked to see just how much business was going on around them that they were totally unaware of. Check with me, Your copy may be FREE. This is an eBook. You must read while you have access to the internet in order to utilize all of the links in this one.

I am having so much fun telling contractors about this program. It is amazing to hear some of their stores of how slow they are right now and they are amazed at how fast they can access this program.
We need more qualified contractors in the program. If you are a contractor "anywhere in the USA" and need work we can show you how to find the right people who can let you start bidding right now.
We actually need good reliable contractors and the problem isn't getting the work, it is that the contractors we get need to be honest and tell us when they are getting too much work and back off the bidding process till they catch up. So many just don't want to turn any work away.
It doesn't do anyone any good if you can't perform. Therefore we ask that you take a break once you are booked out and let us know as you get ready for more work. We will help you stay busy but we ask that you cooperate with us in that regard and we'll keep the clients happier, as a TEAM we are more powerful.

Friday, October 11, 2013

What is the Difference Between a Standard 203k & a Streamlined k?

I've just been reading a number of blog posts that all says something about this quesiton and they all seem to have different opinions... lets get it straight and clear the air

Streamlined k 

... is for NON-STRUCTURAL issues and a loan amount under $35,000 including costs and fees which are typically about $800 therefore the maximum amount of the contractor's bid is going to be about $34,200 NO MORE otherwise it becomes a Standard 203k loan. This is like a check valve. Should the contractor bid $34,500 and we add the $800 costs and fees it is now above $35,000 and trips the check valve to a full 203k loan and a consultant will be brought in on the project.

Don't be fooled into thinking this is all inclusive... it isn't. If your lender "requires" a contingency reserve like many do, we need to back that out of the contractor's maximum bid amount too. If the lender "requires" a 10% contingency the maximum contractor bid will be reduced to about $30,780... if the bid comes in higher than that this loan becomes a "Standard 203k" project. Simple, not quite. Academy Mortgage and a few others require a 20% contingency so we need to back out more from the contractor's bid to about $27,360. Anything over that amount and this is now a Standard 203k and a consultant would be brought in on the project. Wow, and everyone tells you the maximum loan amount for a streamlined k is $35,000 - the fact is that IT ISN'T! It never was, it was always $35,000 including costs and fees.

Standard 203k 

I have just been reading those other blogs that say the Standard 203k is for "structural repairs". Not necessarily. Just because the Streamlined k is for non structural repairs ONLY doesn't mean the Standard 203k is ONLY for structural repairs. In fact a Standard 203k can be for non structural repairs in excess of $35,000 or structural repairs that don't even come up to the $10,000. Just because the repairs are structural the Standard 203k is your only choice between these two loan programs.

A Standard 203k can be for repairs in which the only limit is the ability of the borrower to qualify up to the maximum loan amounts for the county where you are located. Alameda, Contra Costa, and Marin counties for example have a maximum loan amount of $729,750 which includes the purchase money or existing debt and the money to make the repairs. We are working on one that the construction cost alone is $670,000.

We had one in Sacramento County where the loan limit is $561,000 and the purchase was for $888,000. The home required $150,000 in construction repairs for a total of $1,038,000. Options were to pay cash and pay the entire $1,038,000 or get a loan for $561,000 and only have to pay $477,000 down payment. Keep your cash and let this low interest loan fixed for 30-years do it's job.

What program would I use for a fire burned home or tornado damaged home? 

Simple, if the home has been damaged by either of these issues it is likely going to have structural repairs. The insurance paid you off so keep that money in your bank and get a 30-year low interest fixed rate loan and use the Standard 203k for your repairs. Yahoo! You now have money in the bank and your house is livable again.

Tuesday, October 8, 2013

Can I Add a Detached Garage with the FHA 203k Loan Program?

Yes, you can, detached garages are perfectly okay with the 203k it is a common missunderstanding that you can't but the rule actually states that IF there is living area at the garage addition or if you are adding living area it MUST be attached to the main structure.

 It was a common thing to add a second unit to an existing home when zoned for it and the lot was large enough by adding a garage or carport or two between the new unit and the existing unit all through the 1990's.

We had several in Rodeo where they had to replace the foundation and lifted the home high enough to add two units to the lower level and convert the original home to two units.

-Mike Young, 203k Team Leader

With offices coast to coast and HQ now at PMB 168, 5055 Business Center Drive, Suite 108 Fairfield, CA 94534 1.707.812.7668. We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation".

Saturday, October 5, 2013

Buying a Fixer Upper Home to Renovate

If you are considering buying a home, now is the perfect time to do so. With interest rates at all-time lows and competitive property values, it is definitely a buyer's market. With that in mind, know that there are going to be hundreds of potential listings to check out, all of which will have their own pros and cons. While a new build may seem enticing and have everything you're looking for, it is important to never stray from your budget. The convenience of new construction comes at a high premium, which is why going with a fixer upper is usually a better option.

Renovating is cost-effective and open-ended

Most people don't realize that buying an older home and renovating it is generally a much cheaper alternative. You have to see past the flaws to and realize the potential a property has before checking it off the list. Most of the time, all it takes is a bit of cosmetic work and a few upgrades to make an outdated home look stunning. Going this route will also give you the ability to customize the house to meet your personal style and taste. Doesn't starting with a blank canvas sound fun? If this doesn't excite you, hopefully the cost savings and added equity will. You may be surprised how much a home's value can increase with a little handy work. Thus, before you get sucked in by a flashy property with fancy amenities, remember you can get all this and more by purchasing a home in need of renovation.

Rooms to remodel

If you buy a fixer upper, chances are you're going to have more money in the bank to apply towards renovations costs (after all that is the point). If you want to make a great first impression and skyrocket your equity right out of the gates, focus on the bathrooms and kitchen. Aside from your master suite, these rooms should comprise a large chunk of your budget. Installing new countertops and adding stainless steel appliances can instantly transform any drab room into a designer-series space. Granite countertops (along with quartz) are big selling points and will last a lifetime without fail.

The best part about purchasing a fixer upper is you will have the opportunity to truly make the house your "home," and that is what it is all about. A little elbow grease and patience goes a long way!

Melinda Pulliam is the Director of Marketing for Craftmark Solid Surfaces. Craftmark Solid Surfaces is Atlanta's granite countertop supplier and their Atlanta granite countertops showroom selection consists of over 19 granite colors and many granite edge profiles to choose from. Craftmark Solid Surfaces also supplies beautiful quartz and solid surface Atlanta countertops. Learn more about granite countertops in Atlanta at http://www.craftmarkcountertops.com/Choose-Your-Countertop/Granite-Color.html
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Wednesday, October 2, 2013

Financing For Mixed Use Properties - 203k Online.com

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