2. WHY 203K Single-close loan to purchase a home that may need repairs Refinance an existing home to remodel Customer can finance the purchase price, or the existing balance, and the cost of improvements into the loan amount Work completed after close
3. FEATURES Primary Residence 1-4 Units Purchase and rate/term refi Fixed Rate 30 year term Up to six months for the rehabilitation One underwriting review and one closing Same credit underwriting as 203B
4. FOR BORROWERS WHO Want an alternative to a 2nd mortgage Are looking for a cost effective way to repair or improve their current home Plan to purchase a home with repair contingencies Want to rehab a damaged foreclosure
5. Types of Properties Owner Occupied Only 1-4 Unit Residential (or mixed use) Condos (additional stipulations) Single Family and Townhomes Must be over 1 year old
6. Types/Differences Streamline 203K Up to $35,000 which must include contingency reserve and supplemental origination fee Actual repairs not over $30,000 to make it work If close to $30,000 may want to use a HUD consultant for inspection Limited on types of repairs, but less documentation HUD consultant not required
7. Types/Differences Full 203K No limit on repairs – up to HUD area limit Structural work allowed $5,000 minimum in repairs HUD Consultant required Up to 5 draws with inspections at each draw Can include up to 6 mos. PITI if not habitable
8. Types of Renovations Allowed on Streamline Remodeling Kitchen & Baths (appliances) Lead Base Paint stabilization Repair/replace exterior decks, patios, porches Repair/replace Heating and AC Exterior and Interior Painting Basement Finishing (no structural repairs) Basement waterproofing Replace windows, doors and siding
9. Types of Renovations Full 203K Structural alterations and reconstruction Install improvements for disabled access Eliminate Health and Safety Issues (mold) Repair swimming pools (up to $1,500) Repair/replace plumbing, install well and/or septic system Enhance accessibility for a disabled person
10. Types of Renovations Full 203K Minimum of $5,000 Structural improvements/changes/additions Add Garage, sun room, deck Repair structural damage Mold Remediation Any repair that might take more than 6 mos. Activities that require more than 2 draws
11. Real Estate Agents Can Move hard-to-sell listings Offer solutions that generate listing and selling commissions Broaden their market of potential buyers and sellers Make potential buyers envision ways to remodel a property to make it fit their needs
12. Work Flow – Loan Officer Have borrower complete loan application Collect basic documents for a prequalification Use the excel worksheet to determine an estimated loan amount Use ONLY 203B in Mortgage Data Screen Provide agent and buyer with normal pre-approval letter
13. Work Flow –203K Dept Contract accepted, pass the file and documents over Proper 203K GFE completed and disclosures printed Application signed with customer Directions provided to customer for contractor bids and process flow Make sure Realtor understands the process
14. Misc Call me with questions regarding repairs allowed Make sure you have the customers information and they’ve been qualified Give a range of rates – about .5% higher than the standard FHA Currently in the range of 5.25% with 2 points Not able to lock until appraisal is complete and cleared
15. Misc Appraisal is completed after all bids are in and contractor has provided W-9 and license info Try to use one contractor – better for buyer Self Help allowed on a case by case – must be in that trade
