FHA 203K – The Self Help Dilemma

When you close as many FHA 203K loans as I do you encounter almost every question. However, I get one more than others; Can I do my own renovations via “self help”?

I’m trained, I know how to paint, I was a carpenter in college, I’ve been doing this for years. I’ve heard all the reasons as to why homeowners should be able to complete their own renovations. I sympathize, I really do. I want you to be responsible for renovating your own house. However, today I want you to realize why this presents a problem, why underwriters don’t want you to try and why many FHA 203k lenders don’t allow it.

There are a couple of valid and pertinent reasons why underwriting has a problem with you doing your own renovations and why FHA 203K self help is against the rules at many lenders.

First reason is the checks go to the contractor and they don’t want them in your hands. Putting thousands of dollars into the hands of homeowners for repairs yet to be completed is a recipe for disaster. While you may be honest, some people are not. The viability of the program depends on qualified contractors doing the repairs as FHA specified. That is why contractors go through a serious vetting process and don’t get the second half of their money until the renovations have been signed off on by the homeowner and the appraiser.

The second reason is for the contractors out there. FHA wants you working and earning money so you can pay for your new FHA 203K mortgage. If you are busy renovating your own house are you working and earning money? No, you’re not. But Jonathan, I’ll do it in the evening after work and on the weekends. Again no, they want the renovations done and done fast. They don’t want you working nights and evenings to complete your renovations that could have been completed in less than a month by a full time crew. FHA wants your 203K loan done and you living in that home inside of 30 days. Why? Because they don’t want you paying two housing payments. They don’t want your house back.

Homeowners, we love you, we really do. We understand you’re handy, we understand your creative, but we want you to understand we’re lending you hundreds of thousands of dollars on a loan based on your home repairs being done quickly and with quality. I know you’d like to do the work yourself, but you can’t and we hope you understand.

APPLY FOR YOUR FHA 203K LOAN NOW!

Jonathan Blackwell FHA 203K Renovation Specialist Hometown Lenders Atlanta, Georgia, 30317	Work: 404-551-3845 Mobile: 404-519-5383 www.203KLoan.net

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I find it alarming that so many so-called mortgage professionals and journalists have consistently and loudly proclaiming that FHA is the “new” subprime.  In reality, nothing could be further from the truth. Those of us who have toiled for years advising, counseling, and preparing our clients for homeownership have known this program to be one of the finest loan programs available for first time homebuyers in this or any market.

We extol the virtues of this program because it is NOT a means to avoid showing underwriters the truth, the whole truth, and nothing but the truth, but the opposite. The reason FHA will NEVER become the “new” subprime is because everything is verified.

All aspects of FHA mortgages are meticulously verified.

• The borrower’s income is verified.
• The borrower’s assets are verified.
• The borrower’s credit is verified.
• The appraisal is verified and underwritten.
• Social Security numbers are verified.
• Dates of birth are verified.
• Borrower’s are checked against a list to ensure they have not defrauded the government or failed to live up to prior agreements with the government.

It is true that opportunities in the underwriting standards allow the consumer to explain blemishes or situations that do not fit into the norm. These explanations must be reasonable and documented. This is the first and most direct opposition to a comparison with “subprime” mortgages. Most of those programs did not require such scrutiny of the borrower or their finances. Many of the homeowner’s, who lost their homes, were not properly advised when they were placed into mortgages they could not reasonably afford. FHA has checks and balances to avoid these indiscretions.

The broad blanket that many cast as a means of comparing FHA and “subprime” does the FHA loan program a horrible injustice. FHA mortgages have helped many homeowners realize the dream of homeownership. Will there be foreclosures that come from people who have FHA mortgages? Unfortunately, yes. There will always be circumstances that lenders, underwriters, and appraisers cannot anticipate. Life has a nasty way of reminding this from time to time.

Many Americans will benefit from and because of FHA mortgages. I am proud to serve those wish to take the next step on getting their piece of the American dream. Wisconsin homebuyers, more specifically buyers in WalworthCounty, in places like Delavan, Lake Geneva, Elkhorn, Williams Bay, and Walworth should know there are many qualified lenders who can and will assist you both honestly and ethically.

Travis Egan

Walworth State Bank

S. Shore Dr & Highway 50

Delavan, WI 53115

(262) 728-4203

(262) 745-5055 - Cell

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After several years of a protracted lawsuit brought about by the U.S. Justice Dept., the final ruling states that rebates are allowed for home purchases in Austin, TX.

So, what does this really have to do with a no down payment mortgage to buy a home?  Think in terms of Nehemiah; et al, and how the seller would increase the purchase price to give a portion of the sales price for down payment or other costs. The basis for the current legal format is that the amount agreed upon (up to the maximum amount of 6% of the sales price)  and written into the sales contract is actually paid to a third party real estate firm who will rebate the amount to the buyer.

The rebate payment is available in two methods of dispersement:

1) As a cash rebate given to the buyer at closing…even in Texas.

2) As a down payment paid to the seller. With this option, there will be a soft second lien which stipulates that there will be equity sharing equal to the percentage arranged with the purchase. Did I mention that this is for mortgage amount up to conforming limits of $417,000? So, if you use the maximum of 6%, you would agree to a 6% share when you sell within the first 5 years, 3% until 10 years, and no equity sharing after 10 years.

There are no first time home buyer or income restrictions with this program. This is for owner occupied single family homes. You still can use the normal amounts of contribution currently acceptable to Fannie Mae and Freddie Mac. Of course, the appraisal has to support the sales price in order for this to work. Otherwise, the amount of financial assistance would be modified accordingly.

I know that FHA hasn’t been mentioned until now. At this time, only the direct rebate to the buyer is available. The actual down payment isn’t allowed. So, with FHA, there would still be a down payment which can come from a family member. The buyer can, if so inclined, reimburse the family member after receiving the rebate check at closing…even in Texas. In a less direct route, it would still be no down payment.

With this being a brief overview of the recently instituted program, stay tuned for updates.

Tom Frey
TX - Austin
Custom Mtg Group
512-821-1185

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The FHA 203k renovation loan is an excellent option for Albuquerque homeowners who want to renovate their current property or take advantage of a New Mexico foreclosure purchase that needs a little rehab work.

Buyers out looking for a great deal generally run across a bank owned or short sale property.  Standard FHA guidelines state that these homes have to be fully repaired prior to the close of escrow, which may require several thousand dollars out of pocket that a first time home buyer hasn’t budgeted for.

However, the FHA 20k program allows a borrower to finance the property and receive an additional $31,000 (depending on your state) towards repairs.

Basically, a buyer is able to finance up to 96.5% on an FHA 30 year fixed rate loan to take advantage of the current low interest rates.

There are a few simple guidelines attached to receiving the repair money, but the concept works perfect for people who are looking at securing a great deal on Albuquerque real estate.

====

Adam Ciepiela
NM - Albuquerque
Charter Funding
505-235-0325

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Do you want a lower rate, but your income, credit or appraisal won’t allow it? An FHA Streamline Mortgage is the answer you are looking for!

An FHA streamline is a spectacular loan for anyone who currently has an FHA loan. The “Streamline” portion of the loan refers to the documentation that is required. This type of loan does not require income, asset or appraisal documentation and can usually be funded with no money out of pocket. An FHA Streamline Mortgage will reduce your interest rate and payments without all the hassle of conventional financing.

Unlike a traditional Conventional or FHA refinance mortgage you are unable to consolidate any debt outside your mortgage. If you want to consolidate you will want to choose a conventional or FHA cash out refinance, unfortunately full documentation is required.

Here are a few of the reasons FHA Streamlines are so easy:

·  Reduce interest rates and payments with no hassle
·  No income, asset or appraisal documentation required
·  No fico score requirements
·  30 year fixed rates (With No Pre-Pay Penalty)
·  No out of pocket expense
·  If rates drop you can streamline again
·  Less than perfect mortgage payment history

With an FHA Streamline Mortgage unfortunately you can not:

·  Consolidate Other Debts
·  Remove mortgage insurance
·  Refinance if currently delinquent on mortgage

Streamlines are easy, fast and affordable. If you would like to learn more you can speak with me directly at:

Mike Harrison      Send me an email Qualify Now Online
Principal Lending Manager
First Federal Mortgage, Inc
Salt Lake City, Utah
801-404-3540 Cell
888-800-1629 Toll Free

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