This saves borrowers thousands of dollars out of pocket.

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Abraham Mason
6 years ago
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2 A 203(k) loan is a loan that allows the borrower to purchase or refinance a home and include in the loan the costs to do repairs, upgrades and remodeling of the home. This saves borrowers thousands of dollars out of pocket.

3 There are 2 types of 203(k) Loans: 1. Standard 203(k) loan. 2. Streamline 203(k) loan. Depending on the home and the amount of repairs that are needed will determine which one is the best fit.

4 Repairs are completed after closing. Work must start within 30 days of closing. The borrower must occupy the property even during construction on a Streamline. 3.5% down payment requirement for purchases. 3.5% is calculated from the combined total purchase price plus renovation cost. Underwritten and processed by LenderSelect

5 Standard 203(k) can finance up to 6 months payments if the home is not habitable due to the condition as dictated by HUD Consultant. Only the Standard 203(k) can finance for up to 6 months payments. This is for major renovations that would make the home uninhabitable as dictated by HUD Consultant.

6 Standard 203(k) Repairs/improvements must be at least $5,000. Consultant required to do full Work Write-Up. Architectural exhibits required, if applicable. No limit to amount of repairs. Streamline 203(k) Repairs/improvements must be at least $5,000. Consultant required for all 203(k) loans to do feasibility study. Repairs up to $31,100.

7 For purchase or refinance transactions. Major repairs and improvements. Loan amount can include repair costs, inspections, consultant fees, other fees, etc. & 10%-20% contingency requirement. $5,000 minimum repair cost.

8 Most work items are allowed on the Standard 203(k) loan with the exception of a few items (luxury and recreational) Up to $1,500 for pool repair.

9 Any repair or improvements requiring more than 6 months to complete. Luxury Item Installation. Pools, hot tubs, barbeque pits, etc.

10 For purchase or refinance transactions. Minor repairs and improvements (upgrades). Loan amount can include repair costs up to and not exceeding $35,000, value permitting. This amount includes inspections, fees, etc. & 10% contingency requirement. PLEASE NOTE: Therefore, the bid amount should not exceed $31,100. Also, the contingency amount can be increased depending on the amount of work needed. $5,000 minimum repair cost.

11 Repair, replace & upgrade roofs, gutters & downspouts. Existing HVAC systems, plumbing and electrical systems. Can be combined with an EEM (Energy Efficient Mortgage). Flooring, paint, siding, windows and etc. Minor remodeling (non-structural) repairs.

12 Weatherization. Storm windows, doors, insulation, weather stripping. Appliances (including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwaves). Improvements for accessibility for persons with disabilities. Lead-based paint, mold, radon abatement.

13 Repair/replace/add exterior decks, patios, porches. Basement finishing and remodeling (not involving structural repairs). Basement waterproofing. Defective Drywall. Minor repairs to Well & Septic. Minor cosmetic renovations. Remodeling kitchens & bathrooms (non-structural).

14 Major rehabilitation or remodeling (such as relocation of any walls). New construction (including room additions). Repair of structural damage (Floor joists, girders, beams, piers, etc.). Repairs requiring detailed drawings or architectural exhibits Landscaping or similar site amenity improvements. Any repair or improvements requiring more than 6 months to complete. Luxury Items (Pools, hot tubs, barbeque pits, etc.).

15 Termite Inspection is required on all 203(k) loans (nationwide where applicable). Well/Septic Inspection required on all Applicable 203k Streamlines.

16 LSMG requires that a property review inspection from a licensed HUD Consultant prior to appraisal order be completed. The review inspector will perform the following for borrower: 1. Home Inspection. 2. Cost break down and write up of repairs. In addition the write up will also provide a list of permits if needed for work being performed.

17 3. Provide borrower with three contractors references who are knowledgeable of how the 203k loan works and how the bids need to be written. 4. HUD Consultant will also let the borrower know what if any, MPR repairs that will be needed to meet HUD guidelines. 5. HUD Consultant will schedule inspection with borrower and will also request that termite inspector be at inspection as well.

18 If using an LSMG preferred provider for this service, the cost will range from $ to $ depending on the property location. Additional $ mileage charge will be included for all other areas. This fee can be paid by borrower at the time of inspection or can be rolled into the loan as a closing cost.

19 Borrower must use a licensed bonded contractor. Contractor must be approved with LenderSelect and must complete contractor approval package. Lowes & Home Depot bids are not allowed. Borrower cannot act as their own general contractor.

20 A W-9 will be required for each contractor working on the project. This is necessary to set up and issue payments. They will also receive a 1099 form reflecting the amount paid to them for work completed. Must complete contractor approval process and be approved by LenderSelect. No more than two different contractors allowed for each loan.

21 1-4 Units. Refinance of existing properties. Properties owned free and clear. Existing properties more than 1 year old. New Construction if it has never occupied must have had CO issued over 1 year.

22 Appraisal must list all repairs/improvements, including cost estimates and provide an as repaired/after-improved value.

23 Identity of Interest transactions are limited on 203k programs per HUD. Identity of interest means any relationship generally based on family ties or financial interests. Only family based sales transactions are permitted for 203k loans.

24 No draws at closing. Up to 5 draws throughout the renovation process. The contractor submits a draw request to the consultant. The consultant: 1. Inspects the property. 2. Insures contractor pulls the proper permits. 3. Ok s the draw request. 4. Submits to the lender for approval. After approved funds will be disbursed.

25 Streamline 203(k) s only have 2 draws: One at closing: The borrower can receive up to 50% of the bid amount at closing. Up to 50% of EEM improvements may also be disbursed at closing. Second and final draw will be disbursed after ALL work is complete. The borrower will receive final disbursement draw instructions at closing which also provides contact information for LSMG 203k disbursement department.

26 The borrower submits the final invoices, mortgage completion letter, copies of permits and final inspection (if applicable) and rehab loan permit loan form to LenderSelect s 203k department. Invoices need to show original bid amount, amount received by the contractor and the remaining balance due. A title update and inspection will be ordered. LenderSelect will issue the final disbursement. Checks will be made to the borrower and contractor. Both the borrower and the contractor must sign them. The check will be mailed to the borrower.

27 With short sales and foreclosed properties, this loan product can help buyers purchase a home with repairs and be able to close and complete the repairs. More options for your buyers to be able to purchase a house that may meet some of their needs but requires some work. You get paid at closing and do not have to wait. Great way to List a property that needs help!

28 Buyers can finance repairs that they may not have cash in hand to pay for. More options for home purchases. Buyers can get a great deal on a home and be able to finance improvements. More options to market a property for sale even if improvements are needed.

29 If you have any additional questions please contact us today!

Limited FHA 203K. Village Mortgage NMLS Intended for Mortgage Professionals Only 1

Limited FHA 203K. Village Mortgage NMLS Intended for Mortgage Professionals Only 1 Limited FHA 203K Before After Village Mortgage NMLS 6331 Intended for Mortgage Professionals Only 1 Program Highlights Up to $35,000 in repairs with no minimum No consultant required Up to 3 Contractors