Redbud Mortgage 203 k powerpoint
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Transcript of Redbud Mortgage 203 k powerpoint
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When it comes to selling a home…
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Attitude is Everything!
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Redbud Mortgage Group 203K Experts
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Redbud Mortgage Group 203K Experts
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Redbud Mortgage Group 203K Experts
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Choosing a 203K Loan
• Looking to purchase that requires repairs
• Owns a home requiring repairs but cannot afford the repairs
• Wants to gain equity in a home purchase using the 3.5% down payment benefit of FHA financing.
Redbud Mortgage Group 203K Experts
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Repair
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Remodel
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Renovate
Redbud Mortgage Group 203K Experts
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One Single Loan
Redbud Mortgage Group 203K Experts
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Outdated Kitchen
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Outdated Bathroom
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Remodel or Renovate
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Borrower Chooses What to Renovate
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Myth #1Takes too long to close the loan
Some people have claimed that with the inspections, repairs and follow up inspections that it took their mortgage loan over 7 months to close. However, with an experienced mortgage lender and a reputable contractor you should be able to close on the loan within 45 to 60 days
Redbud Mortgage Group 203K Experts
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Myth #2There is too much paperwork
Granted, an FHA loan has more paperwork than a conventional loan. However, in essence you are doing two loans in one; you are buying a home and you are taking out a loan to do some major renovation to the house. Normally, two mortgages would be a ton of paperwork. So, borrowers have to be reasonable on this point.
Redbud Mortgage Group 203K Experts
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Myth #3It does not make sense to borrow money for paint, carpet, etc. and then pay for 30 years on it
If you choose a good property in the right neighborhood, you will actually be building your equity from the beginning. For instance, if you find a home that can be bought for $95,000 and needs approximately $25,000 in repairs then you are borrowing $120,000 in total. If your home is worth $130,000 or more as soon as the repairs are made then you have built up $10,000 in instant equity.
Redbud Mortgage Group 203K Experts
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Myth #4Dealing with repair bids is too troublesome
This is why you should work with a contractor that has experience with FHA guidelines. Our General Contractors understand what is allowed by FHA and what is off limits. They can inspect the home and give you a bid that should meet the rules of the FHA and get passed by the FHA appraiser when the work is finished.
Redbud Mortgage Group 203K Experts
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203K Contractor• The general contractor will
carry over all of the sub-contractor’s bids onto his/her own bid. The general contractor will be responsible for overseeing that all repairs are done in a professional and timely manner.
• The general contractor will also be responsible for disbursing all funds to the sub-contractors when funds are released from escrow.
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203K Contractor continued…• The general contractor
must carry sufficient insurance equal to the total amount of the rehab amount through a valid and current E&O or liability insurance declarations page.
• The contractor must provide a detailed work write up or bid itemizing all repairs that are to be completed with cost and note if permits are required.
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203K Streamline limitations
• Total rehab escrow under $35,000
• 10% contingency required (part of the $35,000)
• Deduct any mortgage payments required
• Usually results in rehab loan of $30,000 or less
• Specification are determined by contractor
• No independent third party to review feasibility study
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203K Appraisal Process
• General Contractor prepares all bids based on conversation with borrowers. Bids are presented to lender so appraisal can be ordered.
• Appraisal is ordered as FHA 203k appraisal and all bids are forwarded to appraiser for consideration while performing appraisal.
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203K Appraiser Process
• Appraiser does the appraisal “subject to” completion of the repairs/improvements and provides an “after improved value” based upon the list of repairs.
• Purchase transactions require only the “after improved” value
• Refinance transactions require both values.
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203K Eligible Property Types
• Owner Occupies Properties only
• Single Family Residences
• 2 - 4 Unit Properties
• FHA approved condo’s
• REO, Short Sales, Foreclosures!
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203K Improvements Allowed
• Roofs, gutters and downspouts
• Mild mold remediation
• HVAC, windows
• Plumbing and Electrical
• Flooring
• Painting - Interior and Exterior
• Kitchen and Bath remodeling
• Septic or Water Well repair or replacement
• Repair or add exterior decks or porches
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203K Improvements Allowed• Storm doors, insulation,
weather stripping
• Exterior siding replacement
• Appliances including refrigerator, free standing ranges, washers, dryers, dishwashers and microwaves.
• Improvements for people with disabilities
• Lead based paint abatement
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203K Improvement Not Allowed• Major structural repairs/major
rehabilitation
• Moving or repairing a load bearing wall
• New construction (adding a room)
• Repairs requiring detailed plans and specs
• Any repair taking longer than 3 months
• Repairs requiring more than 2 draws
• Luxury items
• Swimming pools, landscaping, hot tubs, tennis courts, gazebos, bar-b-que pits,
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203K Contractor Payment• Contractor receives deposit at time of
closing
• 35% to 50%
• Requires signature by contractor
• Balance is paid after 100% completion of work
• Appraiser re-inspects finished work
• Final draw following appraiser re-inspection.
Redbud Mortgage Group 203K Experts
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Serve More Home Sellers!
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Serve More Buyers!
Redbud Mortgage Group 203K Experts