Friday, May 30, 2014

What Kind of Foundations Do We Run Across with the FHA 203k Loan?

Concrete perimeter foundation Concrete perimeter foundations are typically what we find and want to find. This foundation type will typically have additional pier and posts throughout the center of the structure.
Pier and post foundation never had a perimeter foundation
Pier and post foundation system was a typical foundation type in the past... still acceptable provided they are common for the area. We would always prefer to see this have a concrete perimeter foundation. We added a perimeter foundation on this home during the renovation process.
 Grade beam center support with concrete perimeter foundation
Grade beam foundations are typically used to replace the pier and posts under the home and in conjunction with a concrete perimeter foundation. We have seen grade beams that merely consist of three grade beams which allowed the water at high tide to flow freely up under the home and out freely at low tide and without restriction that a perimeter foundation might cause.
Concrete slab with no steel reinforcement
Concrete slab foundations are also common in CA and NV. This one has settled quite a bit and was leveled using "push piers" and a foam filler.
Anything is fixable with the FHA 203k

Tuesday, May 27, 2014

Where Did The 203k Come From? FHA 203k Renovation Loan History

A brief history lesson, by Josh Smith a 203k Renovation expert, explaining where the FHA 203k Renovation Loan originated from!

Saturday, May 24, 2014

What Minimum Upgrades are REQUIRED on a 203k?

This will show you the minimum requirements for an FHA 203k project

30A-110V main panel no good for the FHA 203kElectrical 

The electrical system must be a minimum of 100 and with breakers no fuses are allowed. So if you're dealing with an older home that has a few system is a penny fuses or cartridge fuses they must be upgraded to a breaker type system with 100 A minimum 220 V.

Attic MUST be insulated
Attic MUST be insulated Attic insulation must be installed if there is none present. Many homes were upgraded some years back when R19 was the norm. It's my understanding that these do not have to be upgraded though we always recommend it as insulation is an easy way to recover your investment.


Weatherization includes weather stripping, caulking at the window and door frames, and in general tightening up the home to minimize air and water intrusion.


Caulking goes right along with weatherization like a hand in glove.

Minimum property standards (MPS) 

The FHA minimum property standards primarily consist of or deal with Health and safety issues. That is, anything that is unsafe should be fixed anything that's a health or safety issue should be remedied. In general, this means badly soiled carpet should be replaced, broken glass or Windows need to be repaired. Boards with nails sticking out of them need to be removed from the site.

There is another aspect of the minimum property standards that deals with whether or not the home appears that it will last as long as the mortgage that were putting in place. So if the front porch is falling apart now, it likely won't last another 30 years and should be repaired. This would include termite issues, dry rot, and broken support members. The caveat is that the home under normal owner maintenance should have the appearance of lasting as long as the mortgage.

There isn't the day that goes by that someone doesn't tell me they just want to do the bare minimum repairs required by HUD/FHA. Then they'll fix the house up after they moved in at their own pace and at their own expense. In many cases the saddens me a bit because I think it's so important to do as many of these things as possible before they move in so they can enjoy their home.

We can do the minimum that is the problem, but is it what they really want. You do not want to be a slave to your house. With the interest rates as low as they are today. It makes no sense not to get most of the work done right now. Then sit back and enjoy your home.

We are seeing lots of failed septic systems which is repairable with the Full 203k. Need a lender try Don Jr at Prospect Mortgage

-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 To contact us for a consultation please go to and "order a consultation".

Wednesday, May 21, 2014

Two Types of 203k Loans - FHA 203k Renovation Loan Differences

Josh Smith explains the differences between the two types of FHA 203k Renovation Loans, and what can be done with them!

Sunday, May 18, 2014

Skyline Boulevard 203k Projects - Why Not?


I love it when I do a talk on the benefits of the FHA 203k or the FannieMae HomeStyle Renovation loan program and they typically get notoriety at the same talk. The fun comes when a Realtor or two tells me that the home values are just way too high for those type loans to work and our clients typcally have the ability to purchase with all cash.

This was a 203k purchase
Not on Skyline Blvd 
 It was over a million with the construction and, yes, the buyer could have paid for it all without any loan. Like most buyers with money, they like to keep their cash fluid so they placed a maximum loan amount over $500.000 on the home at just under 4% at that time and kept his bank full of cash in the process.

Thursday, May 15, 2014

The Differences between the FHA 203k and The HomePath Renovation Loans Explained

In this video Josh Smith explains the differences between the FHA 203k Renovation Loan and the Fannie Mae HomePath Renovation Loan. Both of these products are great for taking properties that are in less than stellar condition and using a loan to finance improvements in the properties.

Monday, May 12, 2014

How Many Layers Of Roofing Is Max?


I received this question this morning 

I have a project with a roof that needs to be replaced.  There are two layers of shingles and the roofer wants to put one more layer on rather than strip the roof.  Is that acceptable?

I know that many don't even know how to count the layers of composistion shingle roofing but to stay focused on the question I'll tell you a story.

I was doing an appraisal years ago when, as I pulled up to the house, I could see a very scolloped roof line. It dipped about six inchues between the four foot spaced trusses. It actually looked like it may have been built that way. 

I did my inspection and when I counted the layers of roofing it appeared to have six layers of roofing. As a 203K consultant I would automatically remove that roof and replace. But on that day I was acting as an appraiser so I called for a roof inspection and certification that it had two years remaining economic life is the FHA HUD rule.

The real estate agent but it let me in was livid. It was the first time in my career that someone actually stood there and yelled at me all the jobs site.

I turned my report in and it seemed like a long time went by, I thought the deal was dead, when I get this phone call asking me to come out and reinspect the property. This time when I arrived I found the roof line was perfectly straight.

As I exited my car the agent who had yelled at me came running out to meet me. I'm already for a confrontation, when I heard him apologizing for his inappropriate actions at our last meeting. That's when I found out that it acts he had seven layers of roofing, and the reason for the scalloped look was merely the weight of the roofing forcing the roof down in that dramatic fashion.

Needless to say me and the Realtor were happy friends again as he indicated the roof are didn't know what was holding that roof up and had we had an earthquake it very easily could have come crashing down on his client and burying him in the rubble.

To my knowledge we used cut the number of layers of roofing off at three layers. No more than three layers of composition shingle roofing at a time. 

Today it's only two. So when you replacing the roof and one layer of roofing exists, it is perfectly acceptable to add one more layer of roofing. This saves the expense of removing the roofing and the expense of putting new tar paper on. I have asked the scene roofers where two layers of roofing existed, remove one layer then install the new layer. They felt this save them having to re-install the felt and possibly repair some sheathing.

Friday, May 9, 2014

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, May 6, 2014

Santa Cruz Mountains Is A Haven For Renovation Loans Like The 203k


Notice that I say "renovation loans like the 203k". That is intentional as the FHA 203k isn't always the best choice for the buyer. Many times the alternatives have better terms or better rates as they are intended for people who have better credit.

Even if all other things are equal there is no private mortgage insurance (PMI) which saves 1.75% on the initial down payment and many hundreds each month. Yes, I'm afraid you have to have very good credit for the alternative loans but the cost is well worth the effort.

I met Justin the other day. Justin repairs credit and says they have been very successful in taking a person's credit scores up by 100 points in a short few months and sometimes it is dramatically changed for the better in 30-60 days.

It is always a good idea to look at all your options because the obvious solution may not be the best solution. Not all lenders offer all these different products.

Saturday, May 3, 2014

What Is a Mortgage? | Financial Terms

Learn about mortgages in this Howcast finance video with expert Gregory McGraime.

Thursday, May 1, 2014

Who Prepares The Scope Of Work For An FHA 203k Project?


That is actually a very good question... the answer can cause you delays in closing if you choose wrongly.

The consultant is typically the first one on the job. The consultant and client create the scope of work and includes the "FHA Must Do List" and add the clients "Wish List". Together these will make the "scope of work". This scope of work is then sent out to bid. The contractor bids the list and they all bid the same list this way.

What we are seeing of late is that some lenders or loan officers are having the contractors come out and they verbally tell each contractor what to bid on. Hoping the list is similar at least... it isn't always because it isn't written down. Even if it is written down it fails most often to capture the FHA Minimum Property Standards for health and safety.

I just had a contractor that was used in the second scenario ask me if we had to secure the open wiring in the house, add GFCI's, add smoke and CO detectors that were missing, and a counter top for the kitchen cabinets since it was missing. They didn't have any of that nor did they want to do the grading.

So far the closing has been pushed back while we argue the merits of the HUD Guideline. I don't want to debate the guideline, we didn't create, we just have to follow it.

Fastest way to get your loan closed, let your consultant develop the scope of work, have your contractor write in his numbers right on the blank forms where indicated for each line item and return it. Wow, is it fast and we know what words they want to change in the scope if they do at all. Sometimes they want clarification and that is perfectly okay... OR...

The contractor can convert the file into a document that they can type into and change the words, and input the dollars... this causes delay as now we have to read and compare each line item in the scope in case they changed the scope... NOT the best way and wastes more time.