The FHA 203k loan program wias designed to renovate our nations aging housing stock. It has been working since 1961 doing just that. Several enhancements were made over the years to make it more user friendly but the big change came in 1994 when they created consultants.
Then a few loan officers and banks decided consultants were making too much money, though they hadn't seen an increase since they were created and in 2005 came the "Streamlined k" and with it the fact that "you don't have to use a consultant for the streamlined k".
That should be a wake-up call to everyone, when you are told "you don't have to use a consultant" note that it doesn't say you can't use one, or that you shouldn't use one, just that you don't have to use one.
There are banks and lending institutions that ONLY do the Streamlined k loans and the majority of them mandate the use of a consultant. Guaranteed Rate Mortgage is one of them. As a company they have figured out that it is cheap insurance to verify the project is really a Streamlined k loan & therefore don't waste time putting it together just to find it is a full 203k and they can't do it near the end.
It is my official position and many of my clients that a consultant earns there fee and is well worth the investment. When you work with someone like Ed Rogers of Wells Fargo it isn't an issue because they do both the full and streamlined k loans.
If you are thinking of a renovation loan it is important that you realize a full 203k takes no longer to put together than does a standard FHA 203b loan if you have the right team behind you. All through the mid to late 1990's a good friend of mine Ricardo Ramos of Platinum Home Mortgage and I did hundreds of 203k loans together. He really knows the product. Platinum Home Mortgage has been only doing the Streamlined k loans but recently has decided to move into the realm of the full 203k. They just hired a seasoned team of draw payment crew members to insure their back end success. Ricardo has always had the prominent distinction of being the best at what he does, this is really going to open up the 203k business in the Richmond, CA, Oakland, San Leandro, Hercules, Pinole, etc areas where it is very well known.
What is the biggest problem with the streamlined k loan product? That is easy. If you don't have a consultant you must get contractor bids. That can be a pain in the "you know where". Ricardo and I were talking with a Realtor yesterday and found that the Realtor did a few Streamlined k deals but the problem was that he had to find a contractor or two and get those bids to keep it together. He was rather impressed to know that I, as the consultant, will find the contractors for him, provide a bid in about two days for the project and is raring to go again and try another one.
He was also tickled that we left with him an entire business model that he hadn't thought of for the 203k. He can now look for properties that his competitors are leaving by the wayside and ignoring. He will now make them the thrust of his new business model. Sorry, you'll have to make an appointment to see this one but I'm putting together a FREE webinar for a select few on this strategy.
