Many of you may have heard about the 203k FHA Renovation Loan, but few have actually decided to dive in with both feet. NOW is the time to start implementing the 203k into your proposals... Here's a scenario:
Realtors: Here's the problem... Have a listing that needs improvements AND the Sellers can't afford to invest in making those improvements? This causes the listing to sit for possibly months & may even be the cause for the property not showing as well. Most Buyers aren't willing (or are unable) to invest money from their savings to improve the property after closing.
BEFORE AFTER
Solution: With a 203k loan, the Buyers can now roll the costs of those improvements into their offer & have them financed...requiring ONLY the 3% minimum FHA down-payment!! IT GETS BETTER! Have a Buyer who doesn't have the 3% down-payment? IT CAN BE GIFTED...essentially allowing the Buyer to enter & close without investment on their part!! Now...here's an even better point...the loan closes (and you get PAID!) PRIOR to the improvements being complete! Would you agree that this opens a world of possibilities for your Buyers & Listing now?
There's never been a better time for you to prove your value and market awareness to your clients. If you need help understanding the process, I will be posting a much lengthier explanation and "tutorial" soon or - feel free to email or call & I'll walk you through.
Don't let it be intimidating - spend a few hours in research & development & your clients will forever thank you!
Josh Perrington
1st Metropolitan Mortgage | FHA 203k Renovation Consultant
2762 Electric Rd, Suite E | Roanoke, VA 24018
Josh@1st-Metropolitan.com | www.1st-Metropolitan.com | 540.904.0842
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We're Passionate about our work & we love what we do! Someone once said, "Find what you're passionate about & you'll never work another day in your life!"...I couldn't agree more. -Josh Perrington
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I've done 203(k) loans and my buyers have done extremely well. The problem in this area is finding a loan officer who knows what they're doing.
The buyer's come to us already pre-approved with a lender, then decide to buy a rehab property and finance it 203(k) but their lender doesn't know how to do it.
You hit the nail on the head, Lenn! We lend in most of the coutry & would love to help if you need assistance.
Thanks for the info Josh. I used a few downpayment assistance programs before, but not a 203(k) program. I'll have to look into it.
There are certainly some bank repos in my market that would be prime candidates for 203k loans.
Josh, I'm actually in the process of working with a Buyer who is interested in purchasing a bank-owned property via a 203K loan...problem now is, the interest rate is higher and the Buyer doesn't want to have to pay "retail" for improvements he can and wants to do himself...unfortunately, just because it's a Buyer's market doesn't mean that the banks will loan money for improvements without making sure they are completed by a licensed contractor. Good tool to have in the toolbox, though.
Josh...good post - the 203k plan has been around for many years...it just seems to come in and out fo fashion as the market turns. Jeff
The newest is a streamlined FHA 203K. The only drawback is this program can't be used with any of the gifted programs and there's a 35K max on the renovation. You're right so many mortgage people don't know what their doing with the program. Another is they don't make as much money on them as they would like.
Jack
Sounds very interesting. Any website you would recommned for further reading and details???
Jack - you're right about the gifted programs...BUT...there can still be money gifted from family members, friends, etc...just not a Nehemiah fund, etc... Great stuff!
James - Honestly - there are a ton of "lead" sites that require you to submit your email address in order to get more 203k info. Feel free to contact me anytime & I'll help you understand some of the options a little better. NJ is an open market just waiting for you!! ;)
Thanks for the info! It's good to know! However the 203K would only apply to buyers that would qualify for FHA loans. Anything similar we can inquire about for buyers using VA or Conventional loans?
I know here in Ohio there used to be a conventional loan product tied to renovation. I don't know if it does exist any more. As for qualifying for FHA almost anyone can and should use FHA.
Jack
The 203K is a great tool for troubled or distressed properties.
Jacks absolutely correct - FHA is definitely the 1st choice in looking for a renovation/rehab product. The only true hold back for someone may be the loan limitation for that county. The loan will still need to fall within FHA limits...
Although FHA has raised loan limits in most areas that would cover most houses and rehabs, at least in my area. My take on the 203K streamline is it's a little more costly and takes a little longer, but what a great way to buy something well below market, make it the way you want and build instant equity. Now if only VA would come up with something along the lines og this program.
Jack
Jack - It would be nice for VA to jump on board...but until then FHA's the way to go!! Please don't hesitate to ask if you need help here...
Luckily I have a few lenders who know how to do FHA 203K Streamlines in my area. Along with the Tax Credit (AKA 15 year no interest loan) it's an awesome way for a first time buyer to get off their thumbs and buy their first home!!!!
Jack
Hi Josh,
This is very interesting. Thanks for the heads up.
Sincerely,
Bruce
P.S. Do you service CA?
We are so blessed in my office, Keller Williams Katy (suburb of Houston), as we have an FHA specialist on site. FHA seems to be changing so rapidly that it's almost impossible to keep up without regular updates.
Julie Fuelling, http://www.fuellingkaty.com