Archive for the ‘203K’ Category

Renovation

Renovation (Photo credit: HatM)

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076. Website is www.ChuckWalden.com

Recently, in Georgia, an interesting thing has occurred.  There is a housing shortage.  If you place an offer on a home, there may be 10 or more offers already submitted.   Over the last few months, this has become increasingly frustrating to the buyers I am speaking with on a daily basis. On one hand, it’s great for the housing market because houses are beginning to be sold for more than the listing price.  But on the other, potential home buyers are having difficulties buying homes.

One thing that I have seen separate winning offers from others is potential buyers are making offers on homes that need a little TLC.  These homes are not receiving as many offers if any.  The 203K loan program is a perfect fit for this market.  If you’re not familiar with the 203K, a basic synopsis is below.

1)  There are two types of 203K loans.  The first is called a Streamline K.  This is for any repairs or renovations needed when the dollar amount is $35,000 or below.  The second is a Consultant K.  This would be for any repairs or renovations needed when the cost is greater than $35,000.

2)  You can choose your own contractor as long as he/she is licensed and has liability insurance

3)  This program can be used to bring the house up to standards and to perform any renovations that you would like.  For instance, if you want to redo the kitchen, add new appliances, upgrade a bathroom, etc feel free to do it

4)  This program does require extra work.  The buyer will need to get a bid(s) for the work being performed

5)  The appraiser will take the bid(s) and appraise the home for what it would appraise for after improvements have been made

6)  After closing, the repairs and renovations are completed and you’re all done

7)  Real estate agents do get paid at closing just like a normal transaction

8)  Make sure to use a seasoned 203K company and loan officer.  If you don’t, you’re setting yourself up for failure. Make sure they lend their own money, have their own draw department, and underwrite their own loans.

I would encourage you to explore this program further. It is awesome for the buyer and for the neighborhoods these homes are located in.  If you are a real estate agent if your searching for a new home, call me or email me if you want more information. It is amazing that more people are finally taking advantage of this program in a seller’s market.  I’m here to help walk you through it every step of the way.

Pontypool Park Choices

Pontypool Park Choices (Photo credit: Wikipedia)

I deal with first time homebuyers on a daily basis and I love it.  Most first time buyers need guidance, advice, and someone they can trust.  One of the main questions I get asked is what choices do I have?  Or, I want a first time buyer program.  It’s my job to ask the right questions in order to lead them down a path where they can achieve their dream of owning a home.

First time homebuyer choices:

A Conventional Loan – A conventional loan normally requires a 5% down payment.  Underwriting guidelines can be a little more stringent and may require a debt to income ratio (money coming in versus money going out) less than 45%.  Anytime you put down less than 20% you will also have a mortgage insurance premium added to your payment.

A FHA Loan – A FHA loan only requires a 3.5% down payment.  Underwriting guidelines allow for a buyer to have some issues as long as there is a reasonable explanation.  This program does have mortgage insurance added to your monthly payment.  FHA also has Upfront Mortgage Insurance.  Until April 9th, this is 1% of your purchase price.  After April 9th, it will be 1.75%.  This amount is charged to the buyer but is added back into the loan and is financed over the life of the loan.

A HomePath Loan – A HomePath loan only requires a 3% down payment.  HomePath loans are only available for HomePath houses.  These are foreclosed homes owned by Fannie Mae.  This loan does not require an appraisal and does not require mortgage insurance.

A Rural Development Loan (USDA Loan) – A USDA loan does not require a down payment.  It does require the home to be located in a specific area and qualify for this program.  Properties can be located online at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do .  Also, USDA has a cap regarding how much income your entire household receives.  If your household is over this cap, you would not qualify.

Renovation Loans – 203K, HomePath Renovation, and Homestyle.  While these loans do require additional effort on the buyers part, they do help the buyer purchase the home with the repairs or renovations included in the original loan.  After closing, the repairs are made.  These programs are also helping home values and steadily increasing values in neighborhoods.  Each renovation program has its own guidelines and requirements.

VA Loan – A VA loan does not require a down payment.  Being a veteran myself, I always love doing loans for other members of the armed forces.

Buying your first home can be stressful.  Make sure you are dealing with someone who can explain all of your options, clearly, and is willing to hold your hand through the entire process.  If you would like to discuss your options, please feel free to give me a call or email me anytime.  I would love to help you realize your dream.

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076. Website is www.ChuckWalden.com

 

Finally.  More and more home  buyers are discovering the benefits of homeownership using a Rehab or Renovation Loan.  Why buy a home that isn’t exactly what you want?  You shouldn’t. Why settle for an outdated kitchen?  You shouldn’t.  If you’re an investor, why use your own funds to repair the problems with the property you are buying?  You shouldn’t.   What if you could replace all of the kitchen appliances, paint the interior, and replace the carpet in your mortgage?  You can. 

There are several types of renovation loans that work with most home purchases.  They all have the same benefit to the buyer.  Finance in repairs, remodeling, and renovation into one loan.  The main three types of renovation loans are 203K, HomePath Renovation, and Homestyle.  They are each different but the end result is the same.  A happy homeowner with a house they are proud to call home.

Another added benefit is that the new home will appraise for more than the purchase price.  This increases home values in neighborhoods which I know all of us appreciate.

If you are an agent or buyer and interested in an easy cheat sheet, email or call me anytime and I’ll send it to you.  This program benefits the homebuyer, the agent, and the community.  A win win for everyone involved.

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076. Website is www.ChuckWalden.com

 

Housing

Image by james.thompson via Flickr

A Homestyle Renovation mortgage combines a home purchase or refinance with home improvement financing into one loan and one closing.  These loans can be used for investment properties, primary residences, or second homes.

With this renovation loan, you can do almost any type of repair.  For example, new paint, carpet, flooring, appliances, HVAC repair or replacement, siding, roof,or even add a pool.  I have found that investors love this program because it allows them to keep cash in their pocket and use the home loan to finance the repairs before renting the unit out.

If you are a real estate agent and have ever showed a property to a buyer that said “I love this house, BUT I don’t like the kitchen” or “I love this house, BUT I wish it had a back deck” or “I love this house, BUT ………..”, a renovation loan is for you. You can and will move more properties and help home values by taking advantage of a renovation loan.

Please let me know if you have any questions or comments.  I would love to help!

 

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076.  Bonus: Click to get a free, no obligation preapproval. I love to work with my readers!

 

Recently, I have heard, on numerous occasions, that 203K loans are the worst.  They take too long, it’s hard to qualify, and they never close.  Guess what?  They are wrong!  One of the benefits of working with the nations 2nd largest 203K lender is that I have the ability to educate realtors and buyers.  We lend our own money.  We handle our own draws.

It is possible that an agent may have worked with a lender that did not have a clue on how to do these in the past.  This probably left a bad taste in their mouth and they vowed never to do another one. If that is the case, realtors are leaving cash on the table.  Now, let me be honest.  203K mortgages are not quick, but they are very doable.  If you can wait 45-50 days to close a transaction, then it’s a piece of cake.  How many times have you heard a potential buyer offer negative feedback on a home such as “if only the kitchen was bigger” or “if we only had a sunroom”?  As a realtor, this should be a buying sign.  If you have a potential buyer that needs something else in a home, then do a 203K.  Add new appliances.  Add a sunroom.  Replace the carpet.  Replace the roof.  Finish the basement.  Replace or repair the AC unit.  Paint the house.  Add a deck.  Use your imagination! 

These loans are perfect for any repairs that are needed or any repairs that are desired.  They are backed by HUD and are simply the purchase price of the new home plus repairs.  I would highly recommend discussing this program with your buyers and both of you give me a call.  Get pre approved and then go shopping for your dream home.

The name of the game is to sell houses.