Agenda:To answer the following questions:1) What is a 203K loan and how does it work?2) Why do you need to know about 203K loans?3) How will 203K Loans help you sell more houses?
How it Works: FHA’s 203K program permits home buyers to financeadditional repairs into their mortgage to improve or upgradetheir home before move-in. With this product, home buyers can quickly and easily tapinto cash to pay for property repairs or improvements, such asthose identified by a home inspector or FHA appraiser.
Why will the 203K Rehab Loan will be a crucialproduct for your business in 2011?
1.2 Million Foreclosures predicted nationally for 2011.Hampton Roads could see as much as 40% of available listingsforeclosures in 2011Banks sell properties As/Is,Government loans ( FHA/VA – Little or No down payment)more prevalent than conventional loans requiring 10% to 20 %down payment.
How many times have you had a buyer clientwanting specific items that were hard to find?
90 % of people who purchase a home repair orremodel after they move in.100% of people have those “projects” they never getaround to!Using the 203K your buyers can complete their dreamprojects BEFORE they move in!When it is time to re-list, the home is alreadyupdated!
Example:FHA 30 Year FixedNew Home Purchase: $200,000.00Principal and Interest payment @ 4.75% $1145.00Cost of Improvements: $25,000.00Visa / Mastercard Payment : approximately $500.00 a monthTotal: $1645.
Example:FHA 203KSales Price $200,000.00Cost of Improvements: $25,000.000Loan Amount $227,741.00Principal and Interest payment at 5.00%: $1244.00Monthly savings: $401.00
Standard 203K ProductNo Limit on repairsMinimum repairs $5000.00HUD Consultant write up requiredStructural Repairs AllowedContingency Reserve requiredPayments can be financed (up to 6 months)No luxury itemsContractor can take up to 5 drawsUp to 4 unit multi family
Streamline 203K ProductUp to $35000 in repairs allowed ( to include feesassociated with repair costs)No minimum repair thresholdNo luxury itemsNo structural repairs allowedNo FHA consultant requiredCan be used for refinance primary residenceUp to 4 unit multifamilyContractor can take a maximum of 2 draws
What do I do if I think my client may needa 203K loan?Step 1.Partner with the professionals at NewAmerican Mortgage. Your 203K experts!Step2.Help your clients find their dream home!
FHA consultant provides a work write up.( Not applicable to Streamline product.)Contractor provides an itemized estimate of repairsthat should match the work write up.Appraiser determines after improved value.Maximum loan amount is 110% of after improvedvalue.
What are the extra costs involved withthe loan?
Contingency reserve: 10 % to 20% of repair costs.Title update feesInspection feesSupplemental Origination1.5% of repair costs or $350.00(whichever is greater)Consultant fee. ( If applicable)
How long does the process take?At New American Mortgage the average turntime for a 203K loan is 9–20 days!