Understanding 203K Loans

Presented By: Mark Williams HUD Certified 203K Loan Consultant North Carolina Licensed Home Inspector (#1814) President: Integrated Home Services & Consulting Inc.

FHA 203K Loan Advantage: FHA Low Down Payment = 3.5% Purchase AND Renovate Using One Low Interest Loan Major or Minor Repairs Qualify No Work Needs to be Completed Prior to Closing Sellers are Paid at Time of Closing 2 Programs are available; Full & Streamline

What is a Full 203K Loan? Originated in 1961 Minimum repair amount of $5000 Finance the purchase price PLUS renovation costs Finance up to 6 months mortgage payments if the home will not be habitable during renovations! Maximum Loan Amounts: (Total Purchase Price + Renovation Costs) New Hanover, Brunswick, Onslow & Pender Counties: $271,050 (as of 01/08/2014)

What is a Streamline 203K Loan? Originated in 2005 Maximum repair amount of $35,000 Maximum Loan Amounts: (Total Purchase Price + Renovation Costs) New Hanover, Brunswick, Onslow & Pender Counties: $271,050 (as of 01/08/2014) No Structural Work Allowed No Moving of Load-Bearing Walls Updating Kitchens, Bathrooms, Paint, Flooring & Roof Replacements are OK.

What is a Streamline 203K Loan? If a project will exceed the Streamline 203K limits…it can be switched to a Full 203K. Some lenders offer only the Streamline 203K option. Have this conversation with a qualified, local lender.

203K Myths 1. The home has to be in a distressed neighborhood.

203K Myths 1. The home has to be in a distressed neighborhood. FALSE. The home can be located anywhere and in basically in any condition…as long as the repairs and purchase price fall within loan limits and guidelines.

203K Myths 1. The home has to be in a distressed neighborhood. FALSE. The home can be located anywhere and in basically in any condition…as long as the repairs and purchase price fall within loan limits and guidelines. 2. The property must need MAJOR work or be in really bad shape.

203K Myths 1. The home has to be in a distressed neighborhood. FALSE. The home can be located anywhere and in basically in any condition…as long as the repairs and purchase price fall within loan limits and guidelines. 2. The property must need MAJOR work or be in really bad shape. FALSE. Smaller renovation projects can qualify for a Streamline 203K.

203K Myths 1. The home has to be in a distressed neighborhood. FALSE. The home can be located anywhere and in basically in any condition…as long as the repairs and purchase price fall within loan limits and guidelines. 2. The property must need MAJOR work or be in really bad shape. FALSE. Smaller projects can qualify for a Streamline 203K. FALSE. If a home would be perfect “if only…” – a 203K Loan may be a great option.

203K Myths 3. The maximum rehab amount is $35,000.

203K Myths 3. The maximum rehab amount is $35,000. NOT TRUE. In a Full 203K the total renovation costs and purchase price are subject to the FHA Loan Limits.

203K Myths 3. The maximum rehab amount is $35,000. NOT TRUE. In a Full 203K the total renovation costs and purchase price are subject to the FHA Loan Limits. 4. Only single-family homes qualify.

203K Myths 3. The maximum rehab amount is $35,000. NOT TRUE. In a Full 203K the total renovation costs and purchase price are subject to the FHA Loan Limits. 4. Only single-family homes qualify. NOT TRUE. 203K Loans can be used to renovate a single-family, duplex, triplex, 4-plex or an FHA approved condo.

The 203K Process Qualify for the loan Find a property Complete a Home Inspection and… Feasibility Analysis & Fixed Price Bids (this is where your HUD Certified 203K Consultant comes in) Complete a Pest Inspection

The 203K Process Qualify for the loan Find a property Complete a Home Inspection and… Feasibility Analysis & Fixed Price Bids Complete a Pest Inspection 203K Consultant prepares a Detailed Work Write-Up

The 203K Process Qualify for the loan Find a property Complete a Home Inspection and… Feasibility Analysis & Fixed Price Bids Complete a Pest Inspection 203K Consultant prepares a Detailed Work Write-Up Appraisal is performed Based on the Renovated Value of the property

The 203K Process Once the loan is approved and closed Rehab Account is created Funds are disbursed as work is completed and inspected There is a 6-month time limit for work to be completed The renovation/rehab is complete!

This home was in great condition…but if only it had a Master Suite… Adding a 2 nd Floor Master Suite as part of a Full 203K Loan.

2 nd Floor Master Suite Completed

As purchased…a distressed property

After renovation using a Full 203K Loan

What Does a 203K Consultant Do? A Consultant works on behalf of both you, the Buyer, and HUD.

What Does a 203K Consultant Do? A Consultant works on behalf of both the Buyer and HUD. 1. Step 1: Evaluate the property and perform HUD 35-Point Checklist. *What needs to be done to conform to minimum HUD Standards

What Does a 203K Consultant Do? A Consultant works on behalf of both the Buyer and HUD. 1. Step 1: Evaluate the property and perform HUD 35-Point Checklist. *What needs to be done to conform to minimum HUD Standards 2. Step 2: Perform the Feasibility Analysis. *To determine if the purchase price PLUS the cost of renovations fall within the HUD Appraisal Guidelines

What Does a 203K Consultant Do? A Consultant works on behalf of both the Buyer and HUD. 1. Step 1: Evaluate the property and perform HUD 35-Point Checklist. *What needs to be done to conform to minimum HUD Standards 2. Step 2: Perform the Feasibility Analysis. *To determine if the purchase price PLUS the cost of renovations fall within the HUD Appraisal Guidelines FYI: Up to 110% Loan-to-Value

What Does a 203K Consultant Do? 3. Step 3: Once a project is determined feasible: A detailed Work Write-Up is created and submitted to the Lender

What Does a 203K Consultant Do? 3. Step 3: Once a project is determined feasible: A detailed Work Write-Up is created and submitted to the Lender 4. Step 4: Once Approved and Closed: The Consultant becomes the Draw Inspector.

What Does a 203K Consultant Do? 3. Step 3: Once a project is determined feasible: A detailed Work Write-Up is created and submitted to the Lender 4. Once Approved and Closed: The Consultant becomes the Draw Inspector. The Consultant is a part of the process until the FINAL Draw. They are there to guide the process from start to finish!

203K Recap Both loan programs are subject to FHA loan limits (Purchase Price + Renovation Costs) Full 203K minimum renovation: $5000 Streamline 203K maximum renovation: $35,000

203K Recap Both loan programs are subject to FHA loan limits (Purchase Price + Renovation Costs) Full 203K minimum renovation: $5000 Streamline 203K maximum renovation: $35,000 Luxury renovations do not qualify

203K Recap Both loan programs are subject to FHA loan limits (Purchase Price + Renovation Costs) Full 203K minimum renovation: $5000 Streamline 203K maximum renovation: $35,000 Luxury renovations do not qualify Seller and REALTORS® receive their funds at closing

203K Recap Both loan programs are subject to FHA loan limits (Purchase Price + Renovation Costs) Full 203K minimum renovation: $5000 Streamline 203K maximum renovation: $35,000 Luxury renovations do not qualify Seller and REALTORS® receive their funds at closing Homes up to 4-Units can qualify FHA Approved condos can qualify

203K Recap Both loan programs are subject to FHA loan limits (Purchase Price + Renovation Costs) Full 203K minimum renovation: $5000 Streamline 203K maximum renovation: $35,000 Luxury renovations do not qualify Seller and REALTORS® receive their funds at closing Homes up to 4-Units can qualify FHA Approved condos can qualify Buyers must occupy the home and may not sell within the first 12 months.

203K Recap Both loan programs are subject to FHA loan limits (Purchase Price + Renovation Costs) Full 203K minimum renovation: $5000 Streamline 203K maximum renovation: $35,000 Luxury renovations do not qualify Seller and REALTORS® receive their funds at closing Homes up to 4-Units can qualify FHA Approved condos can qualify Buyers must occupy the home and may not sell within the first 12 months. FYI: 203K Loans are available for REFINANCING a current mortgage!

203K Loans They can be a great option to help YOU buy your DREAM HOME! An experienced, HUD Certified 203K Consultant can guide you through the process…smoothly!

Let Me Answer Any Questions! Mark Williams HUD Certified 203K Loan Consultant North Carolina Licensed Home Inspection, #1814 President, Integrated Home Services & Consulting, Inc. Call Today – (910) or –

Market Street Wilmington, NC Renovation