Saturday, October 31, 2015

Can Portola CA Take Advantage of the FHA 203k Programs?

The hustling bustling town of Portola located in Plumas County CA, can certainly use the advantages of the FHA 203k loan guarantee program. Why do I say "loan guarantee program"? Simple because that is what FHA is. They guarantee the lender that they will buy the loan back up to 96.5% of it anyway if for some reason the buyer doesn't make the payments and the home needs to be foreclosed.

What that means to the buyer or person refinancing is two-fold.

1) The borrower gets into the home with only 3.5% down and only 2.5% down on a refinance and their equity may be substituted for that so they might get the refinance and renovation money with no money out of their pockets.

2) The borrower gets the money to purchase or refinance AND the money to remodel or renovate the home all in one, low interest, thirty-year fixed rate mortgage. Money is only limited by maximum loan limits for the county. In Plumas County it means you might purchase a home for $250,000 and put another $75,000 into it in remodeling. Make it YOUR own home with your finished touches.

What it means to a Realtor - lots more business even when inventory is low. How is that you say? Easy, when inventory is low you may have a 2-bedroom home with one bathroom and your client needs a 3-bedroom, 2 bath house... it is a 203k and we add the other bedroom or two and bathroom or two.  Just think of it this way, you have a 2-bedroom house for $175,000 and they put $175,000 into the remodel. In 3-5 years you will likely be selling that $350,000 home for them.

What about those mixed use buildings downtown? Did you know you can purchase a mixed use building under this program? Higher commissions are all yours. What is a mixed use that would qualify? How about a storefront with two stores of living area above, even one story of living area above. You merely ignore the commercial aspects and count the residential units to see what $ amount you can get from the chart below.  So, for three units over a commercial store you are looking at a loan amount of $521,400 which means the sales price might be about $540,000.00 and the buyer gets in for 3.5% down payment or about $18,900. Lives in one unit, rents two out for about $600 per month each so their rent on their living unit is about $1800 per month and they have the store to rent out or run their business. If they tent it out for $2000 per month they are living rent free in Plumas County, Portola CA

PLUMAS County FHA Loan Limits

One-Family - $336,950
Two-Family - $431,350
Three-Family - $521,400
Four-Family - $648,000

Wednesday, October 28, 2015

Buy That House - The Fix-up Loan

Have you been looking for a house for some time now, but you have not found the one that is just right for you?

It could be for any number of reasons that the houses that you are seeing do not meet your requirements.

The layout is all wrong; The kitchen cabinets and counters are old and warped; The baths were in style back in 1945; You would be embarrassed to bring your friends and family to the place; The windows are of the old and energy wasting single pane variety; The furnace looks like the space capsule; The hardwood floors would be nice if they were sanded and buffed; The walls need to be painted after you scrub off years worth of cigarette deposits; The basement is dark, damp, and downright spooky;... And, yes, unfortunately, the list can go on and on. Certainly, you do not want to buy someone else's problems related to their lack of maintenance or a house styled to their preferences in design. Who has the time or the money to deal with these issues?

But wait. There may be a solution. You may be able to get a house, which meets your wants, needs, and desires. You may be able to have a house that is within your budget. You may be able to overcome the problems, which were created by these neglectful homeowners.

Indeed, you may be able to meet your objectives and at the same time actually purchase one of these homes, which have just left you disappointed and wanting for more.

The solution: The FHA 203K loan. Basically, this loan will allow you to purchase one of these less than desirable homes, fix it up, and still stay within the values for homes in that particular neighborhood within which you are looking.

Here are some general statements about using this type of loan:

First, if you purchase one of these homes, then you can expect the price to be lower, than if the house were in good condition. The appraiser will definitely consider the value to be lower than the better houses. So a house that has the potential to be worth $200,000, for example, could be purchased for let's say $100,000 or a number, which reflects the amount of work, which is needed. Second, the work which needs to be done, in order to actually qualify for an FHA loan, plus the work, which you would like to have done to make the home your own is determined. Let us say for our example that the cost of this work would be $75,000. Notice that the total of the purchase price and the fix up cost are $175,000 rather than $200,000. Typically, one can expect to pay less than the nice house price, because there are very few buyers if any who will want to take on this endeavor without some profit or equity involved. However, even if there were no equity at the completion of the project, remember that your other objective was to have a house, which meets your requirements. The basic steps to purchase a home by this method are as follows:

· Work with your lender to determine the amount of house that you can afford and payments, which would be in your comfort range. With this information, you can determine the price range for homes that you can afford;

· Work with your Real Estate Agent to find a property. Even if you are using a FHA 203K loan, you will still want to look in the neighborhood of your choice, look for houses, which have sufficient living area for your needs, and are within the cost and value parameters, which were established with you and your lender. It is important that your Real Estate Agent have some knowledge, although they do not have to be an expert, of the cost of various home improvement projects;

· When you find a house that will meet your requirements, prepare an offer to purchase. The offer must state that you will be using an FHA 203K loan. There should be a feasibility contingency which is to determine the full scope and cost of the repairs;

· Once, you have a ratified contract, you will start your feasibility study. This step may require several experts. These experts will be perform the following activities:

- 203K HUD Consultant: Walk-through with a visual inspection to determine if the property has any chance of meeting the cost requirements. If the numbers do not work, then the contract should be terminated at that point.

- Home Inspector: An inspector will look at things in more detail than, the 203K Consultant. For instance, the inspector will pull the electric panel and examine for any not to code, unsafe, or outdated wiring. If the inspection uncovers problems, which were beyond your original repair estimates, then you may need to recalculate to determine if the numbers can still be managed. If not, then the contract should be terminated;

- 203K HUD Consultant / General Contractor: Return to the property for a more detailed examination. At this time, he will prepare a report, which itemizes, with costs, those things, which will be done. It may be worthwhile to bring your Contractor with you for this visit. It is your Contractor who will need to agree to the pricing that goes onto the 203K HUD Consultant's report;

- FHA Appraiser: The appraiser will look at value in two ways, one the value of the property in its current condition, and two, the value of the property in its fixed up condition. Also, the appraiser will make certain that the report from the 203K HUD Consultant includes conditions related to Minimum Property Condition Standards;

- Termite Inspector: FHA will probably require a termite certification, but the termite inspection is not necessarily needed upfront. Between the FHA 203K HUD consultant and the Home Inspector, you should get a good idea as to whether this should be done upfront or not.

- Lender: The Lender will review the report from the FHA 203K HUD Consultant to assure that all of the numbers still work. If so they will process the paperwork.

· If everything is still within budget after all of the inspections and appraisals, then the deal will go to settlement and the Buyer will take over ownership of the property. Notice that it is still the house, which needs work.

· Per the terms of the 203K Loan, the work must be completed within 6 months and should be overseen by a General Contractor. Also, it is preferable that any work that is to be done be by licensed contractors, however, it is possible for the Buyer to perform some work such as painting, although it is under the eye of the General Contractor.

· The General Contractor should understand that he does not get paid upfront. He gets paid in phases after various stages of the work are completed. As each stage is completed, The FHA 203K HUD Consultant and the Buyer examine it and then sign off if it is okay before the General Contractor gets his money.

The Buyer cannot move into the house until the house meets occupancy requirements. It is possible that, depending upon the improvements, the Buyer can move in from the start or possibly not until the project is complete.

The loan amount is based upon the purchase price plus the cost of the estimated repair costs, as prepared by the FHA 203K HUD Consultant. If the actual cost is less than estimated, then it increases the equity, but does not reduce the payment.

Since some degrees of repair will preclude the Buyer from moving in to the property right away, the FHA 203K Loan has a provision, whereby up to 6 months of payments can be financed right into the loan. With this feature, a Buyer is not paying for rent and a mortgage payment at the same time.

This is the basic procedure for a FHA 203K Loan. Of course, there are other details and the procedure could deviate on any given deal.

That's it. You can get the home of your dreams and in your price range and all from someone else's mess.

 Ron Trzcinski

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Sunday, October 25, 2015

Create Inventory to Meet Your Client's Needs

By Mike Young

What I love about this business is that we see a different house or two every day and watch it as it transforms to meet the buyer's expectation.

Yep, that is my Chrysler 300 in the driveway.

This is the "after" scene if the same house. Nice neighborhood but there were no homes in that neighborhood that fit this family's needs. So they added SF to the home to get the home they wanted and in the neighborhood they wanted.

When inventory gets low this is a viable solution to many home buyers.

This can make the difference in an average Realtor and an exceptional Realtor. Providing your client with the home they are looking for, even when it isn't readily available.

You have to be looking at your inventory differently than you may have ever looked at it before. This is why I enjoy working with "Rookies" as they aren't "set in their ways" where they can't see the potential.

In all cases the work happens after the close of escrow. The Realtor gets paid, and goes to the next buyer. The construction starts and we stay with the buyer to the end of the process. We are happy to copy you on the progress photos if you like so you can stay in tune with the progress and create a portfolio of before and after photos. If you want to do that now to help you get started feel free to request photos for that purpose. We have thousands of archieved photos for you of homes we have completed.

REO Realtors, provide us with addresses of your hardest to sell properties and we'll give you some marketing ideas to help you sell those unwanted properties. We can even do manufactured homes with some minor stipulations. Even if they were built prior to 1976? That is the question isn't it?

Thursday, October 22, 2015

203k Lender Training

Lender Training now available. Be the best you can be. We'll show you how to provide the best possible service, help you with your Quality Control program, getting you set up right in the beginning can make all the difference in your success or failure with the FHA 203k.

Did you know the lender is REQUIRED to choose the consultant yet we see borrower's changing that assigned consultant now and again. We'll even show you want works and what works better with your marketing efforts.

Why spend a lot of money on things that we already know "doesn't work" marketing the FHA 203k loan program is so simple that most won't do it, thinking it is so easy it won't work... we prove it works, every time, If you want more loans this simple and inexpensive technique works wonders.

Call for an estimate tailored to your needs 
1.707.812.7668 ask for Mike

Monday, October 19, 2015

Can I Replace the Foundation with a 203k loan?


I have a 203K client that is starting the project from the foundation (pier and beam). During the estimate development process, the contractor selected is recommending replacement of all piers is that okay to replace all piers and still remain compliant with 203K rules?

Yes, it is. You can repair or replace a foundation with the FHA 203k and the HomeStyle Renovation Mortgage Product. This gives you options. We start with homes that have faulty or no foundations all the time.

This home had a foundation that you could actually grab a hand full and it would fall apart in your hand. The contractor was a bit older and didn't like bending over so much so he raised the house a little higher so he didn't have to bend over to work on it.

Saturday, October 17, 2015

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.


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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Tuesday, October 13, 2015

Lender Lingo - What To Know When Applying For A Mortgage

The fact of the matter is no one likes talking about borrowing money, but for many of us there comes a time when it's unavoidable. This inevitability doesn't have to be a heart-pumping, palm sweating nightmare. With the proper mindset and planning, going to a lender for a mortgage can be an easy process with minimal stress, and you'll come out knowing every possible answer. When preparing for the big day, here are some things to keep in mind.

Type A or B?

A good first step is getting to know the types of financing offered by your lender and which of those loans they believe will best suit your personal and financial situation. For instance, if you're buying a house that is in a less than perfect state, an FHA 203k may be the best choice. An FHA (or Fair Housing Administration) mortgage allows for the renovations, repairs, and the cost of the house all in one. On the other hand, if your future home is in a higher than normal cost bracket, then you may need a "jumbo mortgage", which comes with some added complications. Discussing the pros and cons of each type of advance and how they may best fit your needs will bring you to the next step.

Act of Faith

Obtaining what's called a GFE or Good Faith Estimate is a must when applying for financing. After you gain, preapproval is the best time to ask for your GFE. This mandatory document is created by the U.S. Department of Housing and Development, also known as HUD, and will provide you with information about the cost to close your mortgage, as well as the terms of the credit and the settlement charges. This form also has important dates, escrow account information, tradeoff table, and a shopping chart. You should bring any questions or concerns about your GFE to your loan officer. If you're still not sure, asking your realtor could also shed some light on any uncertainties.

Avoiding the Tar Pit

It is important to know what will slow your loan down. Many don't know that preapproval does not guarantee you to a line of credit. Make no mistake, until the full process is finalized, they don't have to give you anything. When it comes time to pony up the dough, a lender will go back through your employment status, credit scores, financial status, and other background information before concluding the transaction. Best thing to do is keep the pace. If you can help it, don't move around large sums of money, switch jobs, or start shopping for a new car after being preapproved. Take the time to go over your credit report, be available if the loan officer has any questions or concerns during the approval process, and always make sure to fill out every document to completion.

Showing your lender that you are making every possible effort to find the best mortgage for your situation, helps them gain confidence that you're a good match for their money. The loan officer is as much a person with a goal as you are, a common goal that you both share. Both of you want to see your application approved and getting all the information possible and keeping your life on a stable path ensures the best outcome.

When looking for a lender, Ann Arbor residents go to Huron Valley Financial, Inc. To learn more, visit
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Saturday, October 10, 2015

I Was Told I Couldn't Refi Till After 6-months - Bah Humbug

When does it make sense to refinance before 6 months is up? 
You just purchased a home, it isn't quite the way you wanted it but you needed to close the loan quickly, or so everyone told you. Now you can't really enjoy it till you get it fixed up and everyone is now telling you that you need to let this loan mature at least six months before you can refinance. Well, it just isn't true. In fact, it would be to YOUR benefit to refinance immediately with regards to getting the money to fix it up.


FHA 203k loans have a little known feature for those who need to fix up a property they just purchased and likely should have purchased under the 203k program in the first place. It is simply that you can refi immediately and as long as you close the new loan within six months of the original loan closing YOU get to count all that money you put down as money you have in the new transaction. This is huge because you can 

This is huge because otherwise you would have to show equity on a home you just purchased and may have to come up with more money to close the new loan. The drawback is that the original lender may loose their commission on the first loan. Not typically an issue if you let them do the new 203k loan. If they don't do the FHA 203k then they just loose their commission. Sometimes $%^* just happens. In many cases they can do the 203k for you  


Wednesday, October 7, 2015

FHA Makes Owning Homes Possible for People With Bad Credit

Owning your own home is now possible despite the fact that you have bad credit.

If you are among those individuals wanting to own a home but have bad credit, you will be delighted to know that is now possible to achieve this. FHA home mortgages are now being given to people with blemished credit. The Federal Housing Administration is a government agency that insures the loan you are applying for from private lenders. Anytime you are unable to pay, they will partly do so on your behalf. With the government securing the loan, it definitely gives lending company the assurance they need. For this reason, even with a bruised credit score, you can apply for this loan and use it to buy or construct your own home.

After the economic recession and the downfall of the real estate business a few years back, construction business today is showing positive signs of getting back on its feet. Businesses are recovering. People are now finding financial stability bit by bit. If you desire to have your own home but you have a bad credit, then apply for the FHA housing loan today.

Some people without a financial background find it difficult to apply for a mortgage. Other people with blemished credit, who want to improve their credit score, use this loan product to repair their credit standing. An FHA mortgage loan requires only a small down payment-about 3% of the total loan amount which you can easily save up for when planning to buy a house. Depending on your purchase price, you can still maintain a fairly low monthly payment. Moreover, with interest rates for mortgages at an all-time low, you can get a huge break on the interest portion of your payment. This loan comes with a requirement for Private Mortgage Insurance, which will increase your monthly payment, but it will be removed once you pay down the loan amount to less than 80% of the purchase price. So, if you want to increase your credit score and you qualify for an FHA loan, now is the time to take advantage of low house prices and low interest rates.

Qualifying for a loan like being quite simple. Aside from being of legal age and a US citizen, you should also have a valid social security number. There is no minimum financial requirement but you need to prove that you have a steady job and you pay your bills regularly. Your income to debt ratio should show that 29% of your income goes to your home costs while 41% goes to your bills and other long term loans. The good news is a lot of people, when applying for an FHA mortgage, are getting approved and are now on their way into owning a house of their own.

When buying a home, don't overlook the importance of due diligence. Home inspection services are vital to ensure you are buying a home that is worth your investment dollars. But, not all home inspectors are created equally. Many states do not require home inspectors to be certified in anything and you can easily obtain a home inspection that isn't worth much in value. However, many qualified home inspectors are certified by the American Society of Home Inspectors (ASHI) and carry a coverted certification with this long-standing, professional organization. Moreover, home inspectors who are worth their salt further their certifications and increase their education in the home building industry. Many quality home inspectors have additional certifications in International Code Council (ICC) and/or specialize in specific testing like radon testing, home energy audits or pest infestations. Do you homework before selecting a mortgage lender for your home finances. But, most importantly, do your research before requesting the services for due diligence vendors. Select a home inspector who will give you a fair, honest and unbiased review of your potential home before you make the purchase. A certified home inspector is worth every dollar they request for their services. They will analyze the integrity of the home's structures and provide you with the knowledge to make a wise home investment decision.

Champia Real Estate Inspections provides commercial and residential home inspections in the Atlanta, GA, Tampa,FL and Orlando, FL areas with ASHI certified home inspectors. Our certified inspectors will deliver complete residential reports within 24 hours, with commercial inspection reports returned within 4 days.
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Sunday, October 4, 2015

We Now Have Three More Offices Opened on the East Coast


We are now open for business on the ground in Naples Florida, Cherry Hill New Jersey, and our 3rd office is opened in Philadelphia.  Joe Perretta has opened and manages these three locations. His principal location is Naples Florida for 203k consulting.
Naples Florida main office

Joe has been consulting since 1996 and for those lenders who need a good 203k appraiser in Naples FL he can do those too. As a consultant for the FHA 203k and Homestyle Renovation Mortgage he is uniquely equipped to appraise them for you. We don't care what part of the transaction we get we are just happy to be a part of it. In addition we can do your compliance inspections as well as the Limited 203k final inspections required if they are over $15,000.

Since the new guidelines came out on the 14th of this month we can do your CIR inspection reports all over the country as well. Thank you for your support as always, we are here to serve and provide more than you expect.

Copyright 1994-2015 Mike Young et al

This represents a home half broken and half fixed up. Our clients have full access to thousands of before and after photos. Won't you join us?

Thursday, October 1, 2015

What Is A 203k Fixer Upper Home Loan?

The 203k "rehab" loan is the most popular loan for fixer uppers. It allows you to buy a home that needs minor to major fixup and also loans you money for the work you want done. Here's how it works:
  1. Meet with a Mortgage Pro who is experienced in doing 203k loans and get preapproved. You will need to get preapproved for not only the purchase price but also the fixup costs you expect as well (for example $150,000 for the home and $25,000 for fixup= $175,000)
  2. Start house hunting with your Buyers Agent. Your Agent needs to be comfortable and knowledgeable about fixer upper homes. If this is not a specialty of theirs, you'll want to find someone else as they will be a huge part of the process.
  3. Write an offer and negotiate the purchase price on a home. You can still ask the seller to do some repairs even though you'll be having more done with your 203k funds.
  4. Decide what you want to have fixed up with the amount of fixup money you are approved for. Lets say its $25,000. You'll need to prioritize what you want to repair or remodel because you can almost always spend more and more money on fixup.
  5. Get bids from contractors on your priority list of fixup items. If work is minor like painting, you can probably do that yourself and not have to use a contractor- but ask your lender to be sure! Give your list of bids to your lender for their approval.
  6. Have appraisal completed that gives an "as is" and an "as completed" value. Your Mortgage Professional will order the appraisal and give the appraiser your list of repairs that you would like to have done.
  7. Close on the home and start the repairs within 30 days. You'll have 6 months total to get all the work done and your lender will pay for repairs at regular intervals as they are completed.
  8. Sit back and enjoy your fixed up home!
Alright, you and I both know nothing goes quite that smoothly so let me give you some tips, cautions, and details:
  • Not all lenders are experienced with this loan so you absolutely must have someone with a track record of doing several 203k loans for other buyers.
  • There are two versions of the 203k- Streamlined for under $35k in fixup and Regular for over $35k.
  • The Streamlined 203k is only for non-structural repairs so no tearing out walls or fixing foundation problems.
  • You can use an FHA loan with only 3.5% down payment with this program!
  • Some safety and energy efficiency upgrades may be required as your first repairs.

Another resource for finding cash for fixup is this Lesson on the Fearless Homebuyer site.
Dave at Fearless Homebuyer.
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