Redbud Mortgage 203 k powerpoint

transcript

When it comes to selling a home…

Attitude is Everything!

Redbud Mortgage Group 203K Experts

Choosing a 203K Loan

• Looking to purchase that requires repairs

• Owns a home requiring repairs but cannot afford the repairs

• Wants to gain equity in a home purchase using the 3.5% down payment benefit of FHA financing.

Repair

Remodel

Renovate

One Single Loan

Outdated Kitchen

Outdated Bathroom

Remodel or Renovate

Borrower Chooses What to Renovate

Myth #1Takes too long to close the loan

Some people have claimed that with the inspections, repairs and follow up inspections that it took their mortgage loan over 7 months to close. However, with an experienced mortgage lender and a reputable contractor you should be able to close on the loan within 45 to 60 days

Myth #2There is too much paperwork

Granted, an FHA loan has more paperwork than a conventional loan. However, in essence you are doing two loans in one; you are buying a home and you are taking out a loan to do some major renovation to the house. Normally, two mortgages would be a ton of paperwork. So, borrowers have to be reasonable on this point.

Myth #3It does not make sense to borrow money for paint, carpet, etc. and then pay for 30 years on it

If you choose a good property in the right neighborhood, you will actually be building your equity from the beginning. For instance, if you find a home that can be bought for $95,000 and needs approximately $25,000 in repairs then you are borrowing $120,000 in total. If your home is worth $130,000 or more as soon as the repairs are made then you have built up $10,000 in instant equity.

Myth #4Dealing with repair bids is too troublesome

This is why you should work with a contractor that has experience with FHA guidelines. Our General Contractors understand what is allowed by FHA and what is off limits. They can inspect the home and give you a bid that should meet the rules of the FHA and get passed by the FHA appraiser when the work is finished.

203K Contractor• The general contractor will

carry over all of the sub-contractor’s bids onto his/her own bid. The general contractor will be responsible for overseeing that all repairs are done in a professional and timely manner.

• The general contractor will also be responsible for disbursing all funds to the sub-contractors when funds are released from escrow.

203K Contractor continued…• The general contractor

must carry sufficient insurance equal to the total amount of the rehab amount through a valid and current E&O or liability insurance declarations page.

• The contractor must provide a detailed work write up or bid itemizing all repairs that are to be completed with cost and note if permits are required.

203K Streamline limitations

• Total rehab escrow under $35,000

• 10% contingency required (part of the $35,000)

• Deduct any mortgage payments required

• Usually results in rehab loan of $30,000 or less

• Specification are determined by contractor

• No independent third party to review feasibility study

203K Appraisal Process

• General Contractor prepares all bids based on conversation with borrowers. Bids are presented to lender so appraisal can be ordered.

• Appraisal is ordered as FHA 203k appraisal and all bids are forwarded to appraiser for consideration while performing appraisal.

203K Appraiser Process

• Appraiser does the appraisal “subject to” completion of the repairs/improvements and provides an “after improved value” based upon the list of repairs.

• Purchase transactions require only the “after improved” value

• Refinance transactions require both values.

203K Eligible Property Types

• Owner Occupies Properties only

• Single Family Residences

• 2 - 4 Unit Properties

• FHA approved condo’s

• REO, Short Sales, Foreclosures!

203K Improvements Allowed

• Roofs, gutters and downspouts

• Mild mold remediation

• HVAC, windows

• Plumbing and Electrical

• Flooring

• Painting - Interior and Exterior

• Kitchen and Bath remodeling

• Septic or Water Well repair or replacement

• Repair or add exterior decks or porches

203K Improvements Allowed• Storm doors, insulation,

weather stripping

• Exterior siding replacement

• Appliances including refrigerator, free standing ranges, washers, dryers, dishwashers and microwaves.

• Improvements for people with disabilities

• Lead based paint abatement

203K Improvement Not Allowed• Major structural repairs/major

rehabilitation

• Moving or repairing a load bearing wall

• New construction (adding a room)

• Repairs requiring detailed plans and specs

• Any repair taking longer than 3 months

• Repairs requiring more than 2 draws

• Luxury items

• Swimming pools, landscaping, hot tubs, tennis courts, gazebos, bar-b-que pits,

203K Contractor Payment• Contractor receives deposit at time of

closing

• 35% to 50%

• Requires signature by contractor

• Balance is paid after 100% completion of work

• Appraiser re-inspects finished work

• Final draw following appraiser re-inspection.

Serve More Home Sellers!

Serve More Buyers!

203K Experts405-990-4042

redbudmortgage.com

Redbud Mortgage 203 k powerpoint

Real Estate