Saturday, December 10, 2016

HomeStyle Renovation Loans Purchase or Refinance

This loan is a Fannie Mae product, what I think makes it very special is that it allows investors to participate. It’s also great for primary and second homes for the owner-occupied borrower.

I hate to start out with limits but at least you know if its a good fit for you or someone you know.

1-4 Units can be Primary residence owner occupied
1 Unit Second home owner occupied
1 Unit Investor

On a purchase transaction, the Loan-To-Value(LTV) is based on two factors and the lesser of the two apply.
  1. Purchase price plus the cost of the renovation
  2. The “AS Completed Value”

For the Limited Cash-Out Refinance (LCOR) the LTV is determined by dividing the original loan amount by the completed appraised value.

Another cool aspect of this product it allows for subordinate and community seconds, this is very helpful to first time buyers with down payment assistant grants from their city or county.
You must use an approved by the lender contractor and if your financing doesn’t exceed 10% of the “AS Completed Value” you can be a “Do It yourself worker” but to do this the property must be 1 unit and owner occupied. 

This loan product requires a 10% contingency reserve and the proceeds for the reno must be placed in an interest-bearing bank account that the lender has control over. Draws are set up and inspections need to be completed before each draw is paid out. Once completed the lender will require the appraiser to provide an Update/Completion Report form 1004D.

For investors doing one home at a time to buy/sell or keep and rent this is a great option and much cheaper then short term high interest rate loans from hard money lenders. Although if that is easier for you based on your documentation or lack of it, I can help you with those too! But you will be surprised how easy the HomeStyle loans are and the rates are great! 
Got questions, contact me or simply give me a call, I would love to talk with you. If you are ready to apply and get pre-approved go to my website Roxy's Website

Realtors, I encourage you to learn more about the loan products that will help you sell your listings and help your buyers with alternatives. This loan product is a valuable tool to do just that. I also have loans for sellers to help them fix, remodel or update their home in preparation of listing it. As you know, these modern fixes help sell homes and increase profits. I offer incentives to sellers that need short term money to make these improvements. 

Ask me about our Certified New Home program and Seller Home Warranty program that insures the home while it's listed. 

No Manufacture Homes (MH) area allowed on the HomeStyle program. But don’t worried I have lots of options for MH. Stay tuned to my blog for my next post on MH, you can join/follow my blog from FB over on the right side of my blog, please do!  

I always like to leave you with a link for research so here are some tips direct from Fannie Mae

I always welcome and encourage your comments and questions.
Thank you for stopping by my blog, enjoy your day!

Roxy Redenbaugh
ACMC Loan Consultant
Certified Mortgage Coach
Branch Manager
NMLS #269926

Sunday, December 4, 2016

FHA 203K Rehab Loans for Purchase or Refinance.

There are two types of 203K rehab loans, the standard and the streamline. FHA (Federal Housing Administration) is a division of HUD (Department of Housing and Urban Development. FHA administers the mortgage insurance for primary residential homes 1-4 units, that allows buyers the opportunity to purchase existing homes with 3.5% down payment. I will explain both types and some of the basics for both.

If you have been shopping for a home you’ve probably noticed many are in need a repair, remodel or a complete overhaul due to foreclosures and bank owned properties. This is a great example where a 203K standard can be used for a purchase. This rehab loan will cover a complete tear down to a complete rehab of all rooms, appliances, roof, electric, plumbing. If you are already a homeowner and would like to rehab or remodel your home, you can also refinance into a 203K standard.

If you are a Realtor this product could help you sell your listings! There are other loan products for seller but that’s another blog post. If interested email me for ways to sell your listings by offering your seller simple fixes that can make a huge difference in the seller net profits.

How a 203K Standard works; The seller or your lender depending on if you are buying or refinancing, your new loan is funded at closing. The 203K is a one time close loan. The funds needed for your rehab portion are deposited into an interest baring account at a bank or credit union and construction costs are paid out from this account just like a construction loan or at the completion of the project. With the 203K standard 5 draws are allowed. Inspections are required before each draw.
Loan maximums are like any FHA loan they are based on your county limits.
Click Here to find your state/county limits

The minimum on the rehab portion is $5000.00. IF your repairs or rehab were at or under $35,000 you would use the 203K Streamline or Limited.

Your FHA/HUD Consultant can make suggestions based on the scope of the project.
The lender will insist on a contingency reserve of between 10-20% to cover construction overages plus your payment of principal-interest-insurance-taxes (PITI) and mortgage insurance (MI) during the construction phase for up to 6 months if the property is uninhabitable. Your FHA/HUD Consultant will determine and make recommendations for the amount of the contingency and the duration of how long the property will be uninhabitable during construction.

You must have an approved FHA/HUD Consultant, that person reviews your plans, architectural drawings, material list and bids. The consultant will be required to complete two reports; A Feasibility Analysis Report (FAR) and a Specification of Repairs or SOR. The consultant will do an inspection before each draw to make sure all the work is done per HUD guidelines
Their fees range from $400 - $1000 depending on the size of the project.

You must have a Licensed General Contractor (GC) who oversees the complete project and works with the FHA Consultant to meet the FHA guidelines. Your GC will normally have subcontractors for electrical, plumbing, roofing all depending of the scope of the project. YOU can help on certain jobs but only under the direct supervision of your GC. The contractor must start the work within 30 days after your loan funds. The lender allows up to 5 months for contractor to finish the project and get the occupancy permit.

You must have an approved FHA Appraiser who will do an initial appraisal before funding of all the rehab plans, bids and cost breakdown and provide in the report the AFTER rehab completion Value. If this 203K is for the homeowner who is refinancing the appraiser will need to report on the “AS IS” value as well as the AFTER-completion value.

Here’s how a 203K Streamline or Limited works; This is a simpler process, you don’t need the FHA/HUD consultant although they are valuable and you might want one anyway! Just not required. This loan has a limit of $35,000 in rehab money available after close. Again the minimum is $5000. You still need a Contractor and Appraiser.
The contractor has 4 months to complete the work.
The type of repairs you can do range from remodeling kitchen/bathrooms to buying all new appliance. A new roof, electrical, plumbing and fixtures, even landscaping can be included. You just need to keep it at or under $35,000.

They are called streamline because the process is much easier and quicker.
However even the 203K standard may seem difficult it’s NOT, most of the work is done by others including your lender (ME) the Consultant, Contractor and Appraiser we all work together to make it all come together. It’s a GREAT way to get a home under market value and make it yours. I highly recommend these loans, they are both great products.

As for you the borrower, qualifying for either of these FHA 203K standard or streamline is basically same as any FHA loan, some lenders restriction may apply in addition to the FHA guidelines. Best way to see if you qualify is to contact me and I’ll get you pre-approved. 
It’s FAST,EASY and FREE! Go to my website to apply and let's get started Roxy's Website
Here’s a couple links to help you with some research, I always recommend doing your research and educating yourself and I am also happy to help with education and research.

Find a FHA/HUD consultant in your state… just add your state in the drop down and all the approved consultants in your state will be listed. After your lender(ME) I recommend talking with a consultant, they can help you with many questions and a referral to the best contractors, who are experience in working with FHA203K projects. They know who are the best in their field.

There are many other interesting factors for multi-family units and how you can use the 203K product. I didn’t get into these types of properties here, because this is a blog not a book. So, if you have questions contact me, or just call me. I would love to talk with you. 

If you are an investor and thinking..... how can I do this too? 
Because who wouldn’t want to buy distressed properties to resell or keep and rent. FannieMae has a product for you too! It’s called the HomeStyle Loan, stay tuned and join my blog over on the right side and I’ll post information and guidelines on that product next.

Thank you for stopping by my blog, I appreciate and welcome your comments and questions.
Have a wonderful day! 

Roxy Redenbaugh
ACMC Loan Consultant
Certified Mortgage Coach
Branch Manager
NMLS #269926