When You Find The "Almost" Perfect House, But Want To Make It Home.

By
Services for Real Estate Pros with Auto & Home & Life Insurance throughout North Carolina

This should lead it off quite nicely:)

Back in my early days of lending, I recall quite vividly the very first Rehab Loan I did.  While I did some legwork in actually knowing the ropes of that particular product before advertising the bejesus out of a very niche loan, I still was caught like a reindeer in some oncoming car's speeding headlights when trying to get them closed in a streamlined sort of fashion.  And then, I had it mastered.  As my particular luck would have it, most of those programs disappeared shortly thereafter.

The echoes in the back of my head rang of a long-lost product I had only heard about and most of what I heard were borderline horror stories.  The FHA 203(K) loan reared its mysterious head and stared me in my wide-eyed glance.  I gotta admit, there was major hesitation on my part in even wanting to get involved in such a misunderstood product.  I knew little about it and wanted to concentrate more on the Conventional sort of stuff that I grew up with in the industry... at least at that point.  Hey, of course I want to corner the market, but not at the risk of looking like an incompetent SOB at the end of the day.

Then, I encountered experts in that very product.  I figured, let's roll repair.

After doing more homework than my combined High School & College Education would vouch that I did back in the day, I chose to go after a market that just may make a dent in not only enhancing the housing market... but the very neighborhoods we live in.

This is just a taste of the FHA 203(K) Renovation Loan!

  • Add a deck or porch, makes for one heck of a Summertime BBQ.
  • Upgrade the electrical system and avoid reading overdue utility bills under candlelight.
  • Modernize the kitchen and watch the The Food Channel in a comparable stadium.
  • Replace a furnace and heck, it's a furnace.  You really don't want that entity breaking down anytime soon!
  • Paint the exterior and/or interior.  Yours could be the only lavender house in the neighborhood:)
  • Install new carpeting.  There's nothing like getting rid of stained residue from a German Shepard you never owned.
  • Remodel a bathroom.  Hey, might as well let loose of your naked body in comfortable surroundings!
  • Replace roofing and/or siding.  There were 58 mile per hour winds in Pennsylvania today, that stuff may come in handy.
  • Refinish wood floors.  That's a big selling point for yours truly.  I adore wood floors and have an aggressive amount of ShamWow merchandise to prove it:)

Program Features:

  • Low down payment
  • Buy and remodel a home with one mortgage!  You can finance the purchase plus the cost of the improvements with one monthly mortgage payment.
  • At least $5,000 in repairs needed to qualify for the 203(K) Loan.
  • They can be used for owner occupied 1-4 unit family dwellings.
  • Closing takes place before the improvements/repairs are made.
  • Money for the repairs and renovations is held in an escrow account and paid out after each phase of work is completed, inspected and approved.
  • By the way, they are fixed rates!

Consider this the teaser post to the taste buds of home renovation lending.  Yup, I'm your proverbial appetizer.

 

Jason Sardi

Mortgage Consultant

1-866-262-8720 ext. 229

jsardi@ihmci.com

Located at our Allentown, Pennsylvania office.  Pennsylvania Based Mortgage Banker/Broker whose area of service include PA, NJ, NY, CT, DE, MD, VA, SC, FL, MI and IN.

close

Re-Blogged 11 times:

Re-Blogged By Re-Blogged At
  1. Mirela Monte 02/12/2009 10:33 PM
  2. Connie Betz 02/12/2009 10:50 PM
  3. Roland Woodworth 02/12/2009 11:11 PM
  4. Stephanie Edwards-Musa 02/13/2009 08:22 AM
  5. ASHEVILLE 1031 PROPERTIES RESOURCES & REFERRALS 02/13/2009 09:56 AM
  6. Jessica Bigger 02/13/2009 11:11 AM
  7. Audrey June-Forshey 02/13/2009 04:13 PM
  8. Erica Ramus 02/14/2009 03:18 PM
  9. Chip Jefferson 02/15/2009 11:23 AM
  10. Castellum Realty Lancaster real estate 02/15/2009 04:32 PM
  11. Virginia Hepp 02/25/2009 09:01 PM
Topic:
ActiveRain Community
Location:
Pennsylvania
Groups:
Zillow Mortgage Marketplace
RE/MAX Active Rain Bloggers
Realtors®
New Jersey & Pennsylvania -- Realtors/Loan Officers/Title Clerks/Real Estate Lawyers
All About Mortgages/Mortgage Networking
Tags:
house repair loans
203k loans
rehab loans in new jersey
rehab loans in pennsylvania
renovation loans
fha loans

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Ambassador
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Chris - It's a process, but can be a very worthwhile one.  You want a housing stimulus of sorts, rehab loans and energy efficient repairs aren't a bad start.

Jennifer - ... or banker.  Or anybody that doesn't recognize what they know and what they don't know.  For what they don't know, they better have folks behind and beside them who do.

 

Feb 15, 2009 12:05 AM #55
Rainer
166,611
Tamara Perlman
Referral Network Inc. - Truckee, CA

Hi Jason--

I've been wondering about where this product was hiding.  I've talked to a number of lenders locally regarding loans to make "green" upgrades.  They would fall into this category, right?  It sounds like your learning curve is probably the reason so many don't know how it works...

I'm guessing PA doesn't really have the same prospects for a winter garden as Napa does!

Feb 15, 2009 01:15 AM #56
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Tamara - "It sounds like your learning curve is probably the reason so many don't know how it works..."  That's the nature of lending, in my view.  Don't get me wrong, there will always be the proverbial staples of the lending atmosphere, but products and guidelines will always change.  In this case, the 203(K) loan has been around for quite awhile, ignored by many (including me for quite sometime).  I think if you do the appropriate research, you will find that this rehab product along with general FHA Guidelines have made a wave of changes, themselves... to adapt to market conditions. 

On a side-note, I'm not a palm pressing fan of the Government taking over lending.  Nothing against the folks buried in white in Washington, I just don't believe they know every answer to our problem(s).  That written, not much here in the way of a winter garden.  We are seasonal, my dear;) 

Feb 15, 2009 02:01 AM #57
Rainer
166,611
Tamara Perlman
Referral Network Inc. - Truckee, CA

Hi Jason-

Too bad about the seasonal garden thing.... It's always been that way every other place I've lived.  I'm really liking this climate, even though it's been raining heavily for days (we really need it!!!)

Do you have any referrals for lenders that understand the 203(K) thing in Northern CA??? 

Feb 15, 2009 03:52 PM #58
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Tamara - Yeah, I know about the seasonal thing.  Let me check on the referrals for lenders that understand the 203(K) loan in Northern California.  I have some associates that may be of help.  I will let you know.

Feb 15, 2009 03:58 PM #59
Rainer
166,611
Tamara Perlman
Referral Network Inc. - Truckee, CA

Thanks Jason.

Feb 15, 2009 06:14 PM #60
Rainmaker
171,907
June Lewis
Northwood Realty Services - New Castle, PA
Realtor Northwood Realty - New Castle,Pa Lawrence Co 7247304571

Hi Jason  This post is not only great information but really entertaining.  You must write these post with a smile on your face because your style is unique and I love it.  Thanks for the information ...I have used these loans and they are great.  I love the way you have presented  the information.  You can write loans across Pa ....right?

Feb 15, 2009 07:13 PM #61
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Tamara - My pleasure.

June - Thank you June!  Yes I can and do write loans across Pa.  Let me know if I can be of help.

Feb 15, 2009 08:44 PM #62
Rainmaker
563,876
Mike Saunders
Lanier Partners - Athens, GA

Sardi - a great product, especially in todays foreclosure market, I let all my buyers know about it.

Feb 16, 2009 07:36 AM #63
Rainer
207,933
James Wexler
wexzilla.com - Scottsdale, AZ

just like mike says, this is one of the few products that works for people in such a tough time to qualify for a loan

Feb 16, 2009 10:28 AM #64
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Mike - As well you should, just have the trusted lending sources in place. 

James - Okay, this has nothing to do with your comment but why are some folks pictures showing up beside their comments and others are not? 

Feb 16, 2009 10:40 AM #65
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

Jason,

This caught my attention days ago, and now that I've had a chance to really read the post, I am very intrigued by the possibility, especially with the REOs we have these days.

Feb 18, 2009 09:54 PM #66
Rainmaker
2,003,314
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Jason, FHA 203 K will become popular as buyers are looking for foreclosures and many of them require work.I will keep you in mind . Thanks for the post.

Feb 20, 2009 06:20 PM #67
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Debe Maxwell
www.AtHomesCharlotte.com | Savvy + Company Real Estate - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Jason!  Thank you so much for clarifying this for me--I've got someone that is looking into using this program and am trying to gather as much information as I can withouth bothering the lender with my gazillion questions!! 

OH, congrats on that little gold star too!

Debe in Charlotte
Feb 21, 2009 10:24 AM #68
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Christine - Speaking of catching attention, I feel like someone did a drive-by spray painting with this post.  Lots of gidgets and gadgets and pictures around here now:)  Hope this helps you and some of your clients who could utilize it.

Gita - Thanks.  Have a good weekend.

Debe - Hey, you should bother your lender with a gazillion questions... that's part of our job.  And thank you!

 

Feb 21, 2009 11:11 AM #69
Rainmaker
351,411
Dan Brudnok
Keller Williams RE- Exton - PA License Number #RS225179L - Downingtown, PA
REALTOR,e-PRO,ABR,GREEN,SRES,CSP

Jason,

I wish more of my deserving Buyer's would see the advantage of this program...

Feb 25, 2009 07:06 PM #70
Anonymous
Kelly Duff & Christine Wilson The 203K Renovation Loan Experts

Great post Jason, Realtors out there need to know about this product indeed!  We are the resident experts for our bank and the local experts on this program and have been doing realtor seminars/trainings at title companies and realtor offices in our area trying to get the word out and get agents as excited as we are about the program!  We have gotten very busy over the last month or so as agents are finally figuring out what a great loan this is!   We are the lender that hosted the combo open house & 203K Rehab seminar with Stephanie Edwards-Musa (comment above) and she pointed us toward the blogs here on Active Rain.  We have never posted here before but felt compelled to do so on this program (and hope we are not breaking any type of rules in the process.)

TWO DIFFERENT TYPES OF THE FHA 203k:  One thing I would like to point out because it is very confusing to agents in our area right now is that there are actually TWO 203K product versions available and they are very different!   There is the FULL 203K loan which has been around for many, many years (since 1938 I believe), and then there is the newer 203K Streamline version  - which was created to try and streamline the process and make it easier for clients and lenders.  SOME of the lenders out there who say they do the 203K loan, only do the Streamline version and do not even know about the FULL 203K and they do not do it well (kind of giving the program a bad taste in some mouths).  So, we get into the problem of lenders who don't know the difference telling clients and agents that certain things can not be done with the program when in fact, the FULL 203K allows much more than the Streamline version and has completely different guidelines for how the program is run.

Jason, it sounds to us like you are talking about the FULL 203K here which, if we had our druthers, would be the ONLY version available!  As mentioned it has been around for many, many years and has had it's really popular times but over the past several years has almost become extinct because with all the crazy loans lenders were doing, it wasn't really necessary.  Now, as many readers have stated, with all of the HUD foreclosures and REOs out there, it has come back full force and thank God for that!  As previously mentioned also, this is the PERFECT loan to help revitalize our communities and improve market values!!!! I know we need it here in Texas and I would venture many other areas need that as well.

THE DIFFERENCES BETWEEN THE TWO:  I mentioned that if we had our druthers, the FULL 203K loan would be the only version and I want to state a couple reasons why and see if you agree.  The FULL version allows for FOUNDATION REPAIR! And with all the HUD homes and REOs sitting out there here in Texas, we are finding that most of them do need foundation repair!  (The Streamline version does not - matter of fact, the FULL 203K is the ONLY financing available that will finance a home with foundation issues!) 

The FULL version is much better/easier/safer for the client because a consultant is used with the program.  Our consultant has been doing these for 22+ years and he is fantastic - A good experienced consultant is key to this program.  He does the inspections in the beginning and during the construction, he writes up all the HUD paperwork that is required, he supplies the client with a list of repairs and any upgrades or renovations they would like to do with a good estimate of the cost and gives them a blank list for them to give to contractors for bids, he inspects and does the draws and lien waivers as work is completed and he also does the final inspection and release of funds.  A good consultant is an advocate for the client and will be with them from start to finish making sure the work is being done in a timely and professional manner (the Streamline version does not require a consultant or a general contractor so you can imagine the issues with clients trying to figure out the bidding process and keeping an eye on the contractors - it doesn't work well!!)

The FULL version has a minimum of $5,000 in repairs and no max (of course the client has to qualify for the amount of the loan plus construction costs and the house will have to appraise - but in all our experience we have not had one issue with appraised value since it is done "as completed!").  The Streamline has no minimum but it has a maximum of $35,000 and is more limiting in what it allows.  FULL allows for up to 5 draws - Streamline only 2. 

DETAILS:  Buyer must plan to Occupy the home (no investors), FHA loan limits apply, min. 3.5% down payment, seller can assist up to 6% of sales price (3% on a HUD home), min credit score of 620 and we like to see at least a couple months worth of reserves, no self help projects - must use a general contractor.  When closing takes place, the seller and agent walk away with their money and construction begins.  The agent pretty much does exactly what they do on any other type of financing transaction - they find the client and the house, close and get paid, the lender, consultant and client does the rest.  I will say that typically closing takes 45-55 days from date of executed contract to closing table and this is generally due to the client taking their time deciding on what they want to do to the house and which contractor they choose - a good lender will have an approved contractor list and supply the client with a few names and help them move the process along!

Forgive us for the long post but we absolutely love this program and like Jason, we want everyone to know about it!  Be sure to do your homework when finding a lender who does the program (preferrably a bank that handles the file inhouse through completion) and make sure they work with a really good consultant!!

Have you ever had a client walk into a home and say "This is THE PERFECT house, I wouldn't change a thing!"  Probably not, there is always something and this is the program for buyer's agents and listing agents alike!

Mar 11, 2009 02:46 AM #71
Anonymous
mikey

Jaon, you are clearly way ahead of most lenders out there pushing the 203k. Glad to make your aquaintance. It should also be noted that the FHA Maximum Mortgage limits have increased dramatically and are no longer considered "low income" buyers. Most any buyer may find it to their advantage to use the 203k on their next purchase.

 

There is still some confusion about the streamline 203k with regards to using a consultant. If a streamline is over $15,000 it requires a "plan reviewer" which is also known as a "consultant" and they can provide the draw inpections.You are doing a fantastic job promoting the "k"

May 11, 2009 02:44 PM #72
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Kelly & Christine - Thanks for such a thoughtful and detailed client. Heck, that was better than my post:) Mikey - It was a pleasure just speaking with you. I look forward to hearing from you and learning from you down the road.
May 11, 2009 03:05 PM #73
Rainmaker
171,907
June Lewis
Northwood Realty Services - New Castle, PA
Realtor Northwood Realty - New Castle,Pa Lawrence Co 7247304571

Hey JAson Sorry I reported these two comments as a concern then noticed the Stop notifying me line below the comments.

I received notification of a comment on your blog. I follow them to keep up with additional comments..this was such a great blog....sorry for the reminder that you have already received 1000 times over

Oct 23, 2009 07:31 AM #74
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