Thursday, October 30, 2014

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!

Monday, October 27, 2014

FHA 203k Rehab Loans and VA Loans - Mortgages For the New Economy

Are you searching for a home and disappointed by the options available? Perhaps the home you can afford is too small for your requirements, or in need of extensive repair or upgrades. Two important federal government loan programs may be available for home buyers who qualify. These include VA Loans (Veterans Administration) for military personnel who have served in the Armed Forces and a 'fixer upper' loan, the FHA (Federal Housing Authority) 203k Rehab Loan. These two loans are reliable financing options for the new economy.

The FHA 203k program requires the home buyer use the property as a primary residence. The FHA 203k rehab loan cannot be used for investment property. The only exception to this rule is if the buyer is a qualified non-profit.

VA Loans are also designed for those seeking mortgage financing for their primary residence. New regulations for the VA Loans include lower credit scores and 100% financing.
Home Buying Guidelines for FHA 203k Loan Program

In the present real estate market, foreclosures are common. Many properties have been sitting empty or they were not properly cared for when owners lived in them. These properties are functional living spaces in need of repair or renovation.

Money is tight and home buyers are unable to obtain additional financing in addition to their mortgage for repairs and renovations. In response, the federal government has created the FHA 203k Rehab Loan so additional resources are available to qualified home buyers. "This is the only loan that some home buyers can afford when purchasing a home that needs renovations," says J. Mansisidor, V.P. Branch Manager of SunTrust in Williamsburg, Virginia.

The 203k Rehab loan adds another layer to financing a home. After a property is selected by the buyer in a desirable neighborhood, the agent conducts a preliminary feasibility analysis. This analysis lists repairs necessary, and tallies the cost of rehabbing the property. The real estate agent also estimates a final market value on the home after repairs. The feasibility analysis needs to be conducted prior to ordering appraisals or estimates, to determine if the cost is too high to make the purchase worthwhile for a home buyer and the lender.

The real estate agent and buyer will execute a contract to purchase the property if costs of repairs and home purchase are aligned with current market values. A home buyer must have a sales contract in order to apply for a 203k Rehab loan. Within the contract there is a clause stating the sale will be contingent upon financing through the government lending program. Home buyers apply for the 203k Rehab loan through an approved HUD lender. Once the application is complete, the buyer obtains written estimates for the repair work needed. HUD lists approved contractors and fee consultants on the organization's website.

Once the house is under contract and estimates are obtained, two different appraisals are needed. The first appraisal will be made on the current value of the home; the second appraisal will be an assessment of the value of the property after repairs are completed.

"The lender sets the loan at the value of the property when the repairs are complete," says Mansisidor. The mortgage cannot exceed the lesser of either the value of the home in its existing condition plus the cost of repairs and 6 months' worth of mortgage payments; or 110% of the estimated value of the home after repairs. The amount of the loan is also subject to maximum FHA mortgage limits, which vary from place to place.

Homebuyers may either hire a qualified contractor, or perform the repair work themselves. If the homebuyer completes repairs, the loan will only pay for materials. Leftover funds for repair can be used for additional repairs, or applied to the loan principle. Repairs must be completed on the home within six months of the purchase. The repair funds are distributed incrementally, and a HUD inspector reviews progress before more funds are released.

Homebuyers may close on the home with as little as 3.5% down. If the home cannot be lived in while renovations are in progress an additional six months of mortgage costs can be added to the loan so that the homebuyer may live somewhere else while repairs are being done.

VA Loans

VA Loans are a federal government lending program designed for Armed Force's members both active and reservist. The requirements have changed dramatically in the past few years. Previously, "credit scores were not required for VA Loans," says Mansisidor, "manual underwriting was applied to the VA Loan process.

Nowadays underwriters, loan officers, and lenders are more cautious. Most lenders now require a minimum 620 credit score. Mansisidor says in the majority of applicants who are approved VA Loans, "Debt to income ratio does not exceed 50%." He also cautions that "applicants should be two years removed from bankruptcy prior to their application date and there must be no late payments on debts for at least 12 months."

There are substantial advantages for those approved for VA Loans. "This is the only loan right now, other than first time homebuyer loans, that offers 100% financing," says Mansisidor. He adds, "No mortgage insurance is required for this loan because the government insures it. This can be a large savings, especially with VA jumbo loans."

The federal loan programs outlined above show that political leaders are working on improving the mortgage financing options available. Home buyers need to keep their credit scores, debt to income ratio, and objectives with home renovations in line with monthly earnings to ensure mortgage approval for both programs.

Elaine VonCannon is an award winning REALTOR with RE/Max Capital in Williamsburg, Virginia. She specializes in retirement and relocation in the Williamsburg, South Eastern Virginia area and in Virginia Estate properties. To learn more visit http://www.voncannonrealestate.com or http://www.estatesinvirginia.com.
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Friday, October 24, 2014

Log Cabins Can be a Renovation Project Too

Log cabins and the FHA 203k renovation program

Can I renovate my log cabin with an FHA 203k loan?

Why not, it is a home and in most cases has a foundation so it is a candidate for the program. It is odd but we get asked that a number of times each year. Again last Friday.

The client is purchasing a log cabin and wants to improve it. Here is a real log cabin example
Log cabin 1


Before scene.

Log cabin 2
Look at the new handrails on the finished project
Log cabin 1 front before repairs 





log cabin after improved

Log cabin 10

Another Log Cabin

Tuesday, October 21, 2014

Renovation Meets Expectations



A couple spends most of their renovation budget on a problematic kitchen.

Saturday, October 18, 2014

My 203k Consultant Isn't Doing a Good Job of Managing the Contractor!

By

Well, I don't know how to put this any other way but "it isn't the consultant's job to manage the contractor" so he or she shouldn't be expected to do that.

1) The consultant is a consultant when first hired. They will consult with you and help you develop a plan to renovate the property. A "scope of work" or "scope of renovation" so that every contractor you might have bid this job does so with the same list of items to complete.

2) Secondly the consultant can assist you in finding a lender or a contractor if you haven't found one. We typically know who can close these loans fast and who only talks a good talk. We can give you our "do not use" list of contractors but only in the event you have chosen one of them. Some contractors, a very short list, don't have a clue about contracting but have had the ability to pass the test and get their license.

3) The consultant can assist you in choosing a contractor from the bids that have come in on the project. The lowest bid may not be the best bid. We had one not too long ago where we bid the job at $82,000 and the first contractor bid over $100,000 and the second bid at $67,000. Of course the owner felt they wanted the $67,000 bid. That is fine but we asked the lender to fund the $82,000 as it was pretty clear to me that they forgot something or made an error and we are not here to bankrupt a contractor.

4) Once the loan closes we are "no longer the consultant" however we then work for the lender as the "draw inspector" on our projects.

No where in our job description does it say we have to, or are expected to, manage the contractor. On the contrary we "consulted" and told you right up front that "YOU are the boss, YOU are responsible to choose the contractor, YOU are responsible to call the contractor and communicate your pleasure or displeasure with the contractor.

As an inspector to monitor the progress we are typically out to see the property about once every 30 days so "the borrower", being there nearly every day, must call the contractor and insure they are on the job when it appears they aren't.

The Homeowner/Contractor agreement says very clearly that once the project begins the contractor should have someone on the project working each day until it is completed so feel free to call them and let them know when their employee(s) don't show up on the job.

Wednesday, October 15, 2014

FHA 203(K) Rehabilitation Loan, Is It For Me?

What is an FHA 203(k) Loan?

There seems to be a lot of confusion about the 203(k) loan from FHA. It is easy to see why, just look at the name, when I think of rehabilitation I think of a long drawn out battle. If I close my eyes and imagine a property that I would need a rehabilitation loan for I picture an old dusty mansion with exposed pipes, a broken down roof with mold damage everywhere, the hard wood floors are worn, warped and need replacing, there are holes in the walls exposing daylight through the bricks and I picture the only thing salvageable being the foundation and load bearing walls. In truth, the 203(k) is perfect for that type of home, but it is also a good program for other types of homes as well. Let's examine some of the options available with this wonderful program.

What is the 203(k)... Really?

One of the questions I'm most commonly asked is "Do you think that this property will pass FHA inspection?". My reply is always the same, as much as people seem to believe that FHA has their own super strict inspection, the do not. There is no inspection required by FHA. They do require that the house is insurable, and sometimes the insurance company will require a 4 point inspection, but FHA doesn't require it. The only other "inspection" required is the appraisal and as long as there are no obvious reasons for the house not to be in good livable condition it passes FHA guidelines. Why do I bring that up? Because the first thought I get when I think about a "rehabilitation" loan is a loan for properties that don't pass FHA's "required inspections", but the 203(k) is so much more than that.

If I were naming the 203(k) loan product, I would have used a slightly different term than rehabilitation. I would have called it the 203(k) Home Improvement loan. This loan can be used to modernize a perfectly livable home, or to change the flooring in a house because you would prefer bamboo flooring to carpet, or tile flooring to hard-wood because you like it better. There is a minimum $5,000 repair threshold in order to do the loan, that has to be met on structural changed, such as remodeling a bathroom and kitchen or changing the flooring. After that 5,000.00 threshold is met, you can even include items like new appliances.

Another great part of this program not many understand is that the 203(k) can be done as a re-finance to a home you already own, this truly makes it a home improvement loan rather than a rehabilitation loan.

Limitations

Of course this is still an FHA loan, so only owner occupied properties are eligible, though the program seems like the perfect fit for the investor buying a foreclosure property that needs some updating, investors need not apply. However a person looking to buy a foreclosed home as their primary residence is the perfect candidate for this type of loan.

Also the process for a 203(k) loan does take longer than a traditional FHA loan, but when you do move in you can have the house completed to the way you like it, with the repairs done by certified professionals and the cost rolled up into one payment with your mortgage.

All of the work must be properly permitted and completed by professionals that are licensed and insured, so there is no getting Uncle Larry to do the work for you to save money. For the right borrower, the 203(k) loan is a fantastic product and should be seriously considered as an option for those not 100% satisfied with the house they may be purchasing. I for one, am very excited about the opportunity to start offering these loans to my clients again.

If you are a realtor with a house that has been on the market for a while and is in need of some updating, it would probably be a good idea to talk about the 203(k) option with your favorite mortgage professional

Find more articles like this at Florida Mortgage Pro Get pre-qualified by me here
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Sunday, October 12, 2014

I Want to Do Some of the Work on My 203k Project - Can I?

 By

Can I do some of the work on my construction project to save money?

A question we get asked all the time. A borrower wants to see if it possible to gain some "Sweat Equity" so they want to do the painting, or they are a sheet metal specialist and want to do the heating and AC work to save money. 

The HUD Guideline says we, as consultants, must have enough in the construction bids to cover these items regardless of who does them. Therefore if the borrower wants to do the painting and the painting number in the bid specification says $3,000, the borrower thinks he can do it for $2,500 and save $500. 

That certainly sounds logical but... and this is a big but.... not a big butt. Sorry. In any case they quite often fail to take into account that the contractor has a profit and overhead number attached to the painting. It isn't all just paint and labor.  The contractor may be paying $2500 to a licensed contractor to do that painting and added his profit and overhead on top of that which is customary. 

The owner thought he would save $500 in this scenario but in fact all he saved was the contractor's profit and overhead which isn't up for bargaining. Even then, the rule for "self help" is that the labor the borrower is imputing cannot be paid out to the borrower so in fact they might save the labor which would pay down on the mortgage but the contractor's overhead and profit will stay with the contractor.

Most lenders want the borrower to be a licensed contractor before they can do "self help". Even then they make it difficult to the point it doesn't makes any sense to do "self help".

Thursday, October 9, 2014

Top Renovation Designers' Tips



The top 10 best designers' tips from House Hunters Renovations are listed.

Monday, October 6, 2014

Home Loan Options With Bad Credit Can Include an FHA Loan

The real estate sector was once the pride of the lending institutions, with generous offers made available to practically everyone. The idea was to increase their revenue from home loans, but as we all know now, that plan backfired and has left the economy reeling since. That fact has not removed the need for home loans, but given the financial realities today, home loans with bad credit have become more common.

With the events of the past few years, there are now less options open to those seeking to have home loans approved despite bad credit. Many of the institutions took such serious hits, they are now gone, while others no longer have the resources to make for sound lending at all.

When it comes to finding a loan to purchase a home, it is now considered a wise option to turn to the Federal Housing Authority, or FHA, and seek a loan from them. In light of the fact that the regular lenders got so much wrong in recent years, there is certainly a peace of mind that comes with the FHA association.

Advantages of FHA Loans

For those who are not aware, the FHA offers a high level of security to home buyers by providing assurance over the stability of their associate lenders. The security is provided through the government backing that its home loans with bad credit receive, with the fact that FHA loans are only issued by approved lenders with that government guarantee.

The principal reason that this level of security is considered so valuable is that it lowers the risk that lenders have to face. This then helps to build their confidence, which in turn helps to relax some of the terms of any loans, ultimately making it easier to get home loans approved despite bad credit.

There are no prizes for stating that getting a loan to purchase a home is not simple under any circumstances, what with the sheer size of the investment. So it can only be good news to learn the FHA loans are available at all.

Government Guarantee

In truth, the value of government approval is huge in the financial sector, so to have the Government provide a guarantee to home loans with bad credit is a huge boost to the lending industry as a whole. The backing provided relates quite literally to the provision of a guarantor for any loans. So, should the borrower fail to may repayments, and default on the loan, the government will buy back the loan from the lender at the existing market rate.

Of course, the benefit for those seeking to buy a home is to have a reliable source from which to get home loans approved despite bad credit. It therefore increases the numbers of people able to get a loan to purchase a home, which can slowly rejuvenate the housing sector.

Other Options

Despite such an ideal situation, it is still possible to see an application for home loans with bad credit rejected. There are, after all, criteria that need to be met before any loans are granted. It is worth considering other options, such as refinancing an existing home loan.

After years of repaying a loan, and with the fact that interest rates have fallen, there is some scope available with which to refinance the loan and save money. When attempts to get a home loan approved, despite bad credit fail, this is clearly a worthwhile option.

Of course, this is not available to first time buyers, making it necessary to get a loan to purchase a home. Shopping around can ensure the best possible is found, but there can be no doubting that home loans with bad credit from FHA approved lenders are amongst one of the better options available.

Donna Hammond is the author of this article. For more information about Bad Credit Unsecured Loan and Mortgages for Bad Credit please visit her website at QuickBadCreditLoans.com
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Friday, October 3, 2014

Do I Have to Use a 203k Consultant on My Project?

The short answer is No, you don't. However there is allot more to it than that. Since there were no consultants prior to 1994 and the program has been around since 1961, HUD says a 203k consultant isn't an absolute necessity. It is, however, REQUIRED by most lenders to facilitate the process.

Prior to 1994 there were many instances where the FHA 203k closing took 4-6 months, not all but way too many. Most Realtors and home buyers don't want to wait that long. A good consultant can shorten that time-line to 2-3 weeks and sometimes even more. This can allow the lender to close in 21-35 days pretty regularly.

There is a "self help" possibility built into the program but most lenders have redifined that to include licensed contractors who want to buy and fix up their own home. The bookkeeping may be too much for most.

If you have a streamlined k you are "in effect" being the general contractor and hiring the sub contractors for your project. If you have to switch this to a full 203k after you have started the process for some reason there are some lenders that will allow yout to continue being the general contractor and maintain your cost savings. Not typical, if you have this situation you may have to change lenders to achieve your goal. I would be happy to talk to your lender for you if you have this situation and see if we can't maintain your multiple contractor configuration.