BILL LADEWIG
Senior Loan Officer, FHA Consultant 760.685.0480 Bill@YourFhaGuru.com http://www.mortgage-mentor.net
CLASS TOPICS
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Finance Rehabilitation
FHA 203k FHA 203k Streamline
Finance Energy Savings
FHA Energy Efficient Mortgage (EEM)
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
• Turn this
• Into This
203(k) PURPOSE
Update Older Homes
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
• • • • •
New Roof Air Conditioning Add a Bedroom Remodel kitchen Add a Garage
• • • • •
Insulate Attic Landscape Insulate Windows Eliminate Mold Add a Bath
203(k) PURPOSE
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
• FHA 203(k) allows the cost of rehabilitation or home improvement to be included in a purchase or refinance loan. – Rehabilitate – Rebuild – Remodel – Add Rooms – Move homes to new lots.
• 203k cannot be funded until home is permanently secured to new foundation.
BORROWER QUALIFICATION
• • • • • There are no borrower income limits. No purchase price restrictions Borrower qualifies per normal FHA guidelines. Borrower’s minimum investment is 3% Down Payment Assistance Programs (DAP) are available for 100% financing.
ELIGIBLE BORROWERS
• Owner Occupants – – Purchase – Refinance • Investors are NOT allowed
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
203k
Eligible Properties
ELIGIBLE PROPERTIES
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Homes must be One year or older • Single family dwellings. • Condominiums and PUDs. • Units maximum of four. – Units can be increased or decreased while conforming to local zoning laws. • Manufactured homes. – built after 6-15-76. • Mixed Use Properties. • Seller can be any legal entity.
APPRAISAL
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
• Property is appraised: – As Is: at Lender Discretion – As Improved • Improved Value must supported by comparable sales of similar properties.
APPRAISAL
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Example of “As Improved “ • Actual purchase price $300,000 • Cost to rehabilitate . 50,000 • Must appraise at Improved Value $350,000 Loan amount is based on improved value • Loan: 97.15% x $350,000 $340,000 • Downpayment 2.85% 10,000
ELIGIBLE IMPROVEMENTS
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
• Virtually any kind of non-luxury improvement is eligible provided it becomes a permanent part of the property and it must add value, such as: – Rehabilitate Deferred Maintenance. – Room additions – Health and safety upgrades – Handicapped accessibility improvements – Energy conservation improvements – Kitchen and bath remodels – Major landscape work and site improvement
ELIGIBLE COSTS
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
• Non-Construction costs can also be included in the 203k loan such as: – Contingency reserve (10%-20%) – Up to 6 months PITI mortgage payments. – Permit costs. – Consultant fees. – Inspection and title update fees – Architectural & Engineering fees
ELIGIBLE IMPROVEMENTS
Not eligible for 203k financing • Luxury items and improvements that do not become a permanent part of the real property. • Items below are examples of unacceptable improvements.
– Barbecue pits; bathhouses; dumbwaiters; exterior hot tubs, saunas, spas and whirlpool baths; outdoor fireplaces or hearths, photo murals; swimming pools; television antennas and satellite dishes; tennis courts; tree surgery. – Additions or alterations to provide for commercial use are not eligible.
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Home Buying Steps FHA 203(k) Renovation Loan.
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
The Essential Team
RE Agent Finds Home and Accurately Comps improved Value.
Contractor Must correctly estimate costs and complete work on time.
Loan Officer Must thoroughly understand FHA Guidelines
REHABILITATION STEPS
1.
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Locate the home and conduct a preliminary feasibility analysis. • Contractor, Realtor and Buyer consult to identify repairs and upgrades. • Total of Purchase price plus proposed repairs must remain in line with values of similar homes in the area.
REHABILITATION STEPS
2.
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Submit purchase offer contingent on • Home inspection • Buyer’s FHA loan approval. • Buyer’s acceptance of any additional improvements required by HUD 3. Once the offer is accepted, the buyer and contactor and possibly an architect prepare a detailed rehabilitation budget and work list.
REHABILITATION STEPS
4.
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
A meeting is then Scheduled with a FHA Approved 203(k) Consultant – The FHA 203(k) consultant checks that the proposed budget and work list to insure that it meets FHA guidelines. – Once the budget is approved, the 203(k) Cost Consultant prepares the work write up for the appraiser and lender.
REHABILITATION STEPS
5. 6. 7. 8. 8.
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Appraiser uses FHA Consultant’s work writeup to value home as repaired. Once the Appraisal is completed Loan closings occurs within 30 days. Due to initial analysis and inspections prior to appraisal the typical 203k takes 45-60 days. Renovation begins after close. • Must begin within 30 days of closing Project must be completed within 6 months.
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Streamline 203k
STREAMLINE 203k
•
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
• • •
“Streamlined 203k” Limited Repair Program allows owner/buyers to finance up to $35,000 of repairs into their mortgage without the additional costs of consultants and architects. Uncomplicated improvements do not require the services of an architect or consultant. Improvements over $15,000 require a final Lender inspection. Other than not requiring a consultant the Streamline follows 203k guidelines.
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
EEM Energy Efficient Mortgage
EEM
•
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Resale Homes – The basic loan for Energy Efficient Mortgage (EEM) is initially underwritten on the purchase price without the cost of the energy package, using basic FHA guidelines.
EEM
•
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Once it is decided the borrower and the property qualify for a FHA loan. – An Energy consultant prepares the Energy Rating report. – And, a FHA EEM worksheet will determine the dollar amount of the cost-effective energy package that may be added to the loan amount. – The minimum EEM amount is $4,000 and, the amount cannot exceed 5 percent of the property's value or $8,000 whichever is less.
EEM
•
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
EEM loans on new construction, as well as those homes that were built to the 2000 IECC or, are being retrofitted to that standard, allow "stretch ratios" of 33% and 45%. – The energy package cost is subtracted from the sales price and the qualifying ratios calculated on this lower amount
ENERGY IMPROVEMENTS
•
Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Energy Improvements costing less than $3,500 can be added to a FHA loan without the need for an Energy Consultant. – FHA requires:
• • Contractor's bid or, Home owner’s paid receipts.
RECAP
•
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Bill Ladewig 760.685.0480 Bill@YourFhaGuru.com
Recap of Improvement Options
Energy improvements without a consultant up to $3,500 can be added to FHA loans based on a contractor's bid or homeowner’s documented cost. EEM allows energy improvements from $4,000 to 8,000 can be added to FHA loans based on Energy Rating report by a qualified energy consultant. 203k Streamline allows up to $35,000 to pay for minor improvements to be added to FHA loans based on contractor bids. 203k allows major improvements with the help of a FHA 203k Consultant.
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THANK YOU FOR ATTENDING
Presented by Bill Ladewig
• Loan Officer – Closing FHA Loans since 1970
– Applications are taken personally – Every borrower thoroughly understands their loan. – Total Cost To Close is accurately disclosed.
• •
Mortgage Trainer
– Training is tailored for each company’s needs.
Consulting
– – – – Individual FHA Loan Setup and Loan Qualifying Establish In-House lending. Obtain Approval as FHA correspondent. Obtain Approval as a California Finance Lender (CFL) Call: 760.685.0480 Bill@YourFhaGuru.com http://www.mortgage-mentor.net