What is a 203K loan and how does it work?

Why do you need to know about 203K loans?

How will 203K Loans help you sell more houses?

 

What is a 203K loan?    

The  FHA  203K  home  loan  program  is  available  to  owner-­‐occupant  homebuyers  to  purchase  or  refinance  homes  that  are  in  need  of  repairs  to  meet  minimum  property  standards  set  forth  by  HUD,  or  for  homes  that  are  to  be  improved  or  

modernized.        

 

How it Works    One   single   loan   is   given   to   the   homebuyer   to   cover   both   the   purchase  price   or   exisHng   lien   (on   a   refinance)   and   the   proposed   improvements.    The   maximum   loan   amount   will   be   based   on   the   appraisal   value   aKer  improvements.    All   repairs   are  performed  aKer   the   loan   is   closed.     The  seller   is   never   responsible   for   the   repairs,   all   homes   sold   under   this  program  can  be  sold  “As  is”.      Basically,  there  is  a  single  loan  that  consists  of  “two  different  buckets  of  money.”    The  first  bucket  of  money   is  filled  with   the   funds   to  pay  off  the  purchase  price  or  exisHng   lien;   the  second  bucket  has  all  of  the  rehabilitaHon  funds,  these  funds  are  held  in  escrow  by  Movement  Mortgage.    The  rehabilitaHon  funds  are  released  based  on  a   draw   schedule   and   are   released   to   the   borrower   &   contractor   aKer  permits  are  issued  and  inspecHons  are  complete.  

     

 

Why do you need to know about 203K loans?    •  Foreclosure  &  short  sale  properHes  dominate  many  markets.  

•  Banks  sell  properHes  “as  is.”    •  Sellers  bringing  cash  to  the  table  lack  funds  for  improvements  to  boost  

sales  price  or  shorten  lisHng  Hme.    •  Home  equity  loans  for  improvements  aKer  purchase  are  now  a  thing  of  

the  past  unless  a  buyer  has  25%  or  more  equity.          

 

 •  PuYng  home  improvements  on  credit  cards  is  costly  for  homebuyers  in  

both  high  interest  rates  and  high  monthly  payment,  plus  the  interest  is  not  tax  deducHble.  

 •  90%  of  homebuyers  remodel  aKer  they  move  in.    •  100%  of  homebuyers  have  those  “projects”  they  never  get  around  to  

compleHng.    •  How  many  Hmes  have  you  had  a  buyer  client  wanHng  specific  items  that  

were  hard  to  find?          

 

How will the 203K Loan be a crucial product

for your business in 2013?

 

•  How  many  hours  have  you  spent  driving  homebuyers  to  lisHng  aKer  lisHng?  

 •  Selling  a  home  in  need  of  repair  can  wear  you  down.    •  The  203K  can  help  create  a  vision  for  home  buyers,  a^ract  more  buyers  and  provide  your  client  with  excellent  service  and  financial  results.  

•  Government  loans  offer  a  lower  down  payment,  less  restricHve  qualificaHon  requirements  and  in  most  cases  lower  interest  rates.  

 

•  Homebuyers  can  select  their  colors,  materials,  and  appliances  to  make  any  home  their  dream  home.  

 •  When  it  is  Hme  to  re-­‐list,  the  home  is  already  updated!  

•  Stabilizing  home  values  and  rebuilding  America  while  bringing  homeownership  dreams  to  life.  

Streamline 203K vs. Full 203K   Streamline 203K    •  Up  to  $35,000  in  repairs  including  conHngency  reserve  and  associaHon  fees.  •  No  minimum  repair  threshold  •  No  luxury  items  •  No  structural  repairs  allowed  •  Contractor  can  take  a  maximum  of  2  draws      Full 203K    •  No  limit  on  repairs  •  Minimum  repairs  $5,000  •  HUD  Consultant  required  •  Structural  repairs  allowed  •  No  luxury  items  •  Mortgage  payments  can  be  financed  (up  to  6  months)  •  Contractor  can  take  up  to  5  draws    

Dream Home Improvement Ideas  •  Kitchen  renovaHon  &  modernizaHon  •  Bathroom  renovaHon  &  modernizaHon  •  Purchase  and  installaHon  of  appliances,  including  free-­‐standing  ranges,  refrigerators,  •  washer/dryers,  dishwashers  and  microwave  ovens.  •  PainHng,  both  exterior  and  interior  •  Flooring    •  Plumbing  and  electrical  systems  •  HVAC  systems  •  Roofing,  gu^ers  and  downspouts  •  Window,  door  and  exterior  wall  re-­‐siding  •  WeatherizaHon,  including  storm  windows  &  doors,  insulaHon,  weather  stripping  •  Energy  efficient  improvements  •  Lead-­‐based  paint  stabilizaHon  or  abatement  of  lead-­‐based  paint  hazards  •  Accessibility  improvements  for  persons  with  disabiliHes  •  Basement  finishing,  remodeling  and  water  proofing  •  Exterior  decks,  paHos,  porches      **All structural repairs/improvements require a Full 203K.    

Dream Home Improvement Ideas for Full 203K loans only

•  Repair  landscaping  •  Fencing    •  Swimming  pool  repair,  limit  $1,500    •  Major  rehabilitaHon  or  remodeling,  such  as  the  relocaHon  of  a  load-­‐

bearing  wall  •  New  construcHon,  room  addiHons  •  Repair  of  Structural  damage  •  Repairs  requiring  details  drawings  or  architectural  exhibits  •  Any  repair  or  improvement  requiring  a  work  schedule  longer  than  

six  (6)  months      

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What do I do if I think my client may need a 203K loan?

Step 1. Partner with the professionals at Movement Mortgage. Your 203K experts!

Step 2. Help your clients find their dream home!  

How long does the process take? At Movement Mortgage the average turn time for a 203K loan is 9–20 days!  

How do we do it?

 

Every loan has the same CTC date.