understanding streamline 203(k) loans
DESCRIPTION
Understanding Streamline 203(k) Loans. Program Highlights. FHA Renovation Program Simplified process! Up to $35,000 in repairs with no minimum! No consultant required Two draws per contractor Contractor can receive up to 50% of total costs up front to defray cost of materials. - PowerPoint PPT PresentationTRANSCRIPT
Program Highlights
• FHA Renovation Program
• Simplified process!
• Up to $35,000 in repairs with no minimum!
• No consultant required
• Two draws per contractor
• Contractor can receive up to 50% of total costs up front to defray cost of materials
Eligible Properties
• 1-4 unit owner occupied properties
• Town houses
• Condos (interior only)
• Row homes
• HUD Repos
Common Improvements
• New free standing appliances
• Interior and exterior painting
• Flooring, carpeting and tile
• Energy efficient improvements
• Other improvements that are a permanent part of the real estate
Other Eligible Improvements
• Changes to eliminate obsolescence and reduce maintenance
• Modernize plumbing, heating, AC and electrical systems
• Install or repair well or septic system
• Roofing, gutters, downspouts
• Lead based paint abatement
Calculating Loan Amount• Use Maximum Mortgage Worksheet (Purchase)
– Purchase price
– Cost of repairs
– Contingency Fund (optional)
– Inspection fees and title updates
– Permit Fees
– Supplemental Origination Fee (1.5%)
• Compare to 110% of after-improved value and use the lesser of the two calculations
• Multiplied by the LTV Factor
Calculating Loan Amount
• Use the Max Mortgage Worksheet (Refi)– Existing Debt
– Total Cost of Repairs
– Closing Costs, Prepaids and Discount Points
– Less FHA MIP Refund
• Compare to lesser of 110% of after-improved value or “As-is” Value + Renovation
• Multiplied by the LTV Factor
Who Can Do the Work?
• Borrower can select their own contractor
– Should be licensed and insured if required by municipality
– Should be able to document qualifications
• Borrower can do their own work only if they can document their qualifications
Getting them Closed
• Borrower collects contractor bids
• Bids are used to order appraisal
• Appraiser will do subject-to appraisal
• Borrower and contractor sign contract
What Happens After Closing?
• Customer receives a “welcome” package from M & T Bank – Mortgage Division
• Work begins
• Up to 50% can be paid to each contractor up front
• Title update will be needed
• Final inspection will be done to ensure workmanlike completion of work
Selling the Streamline K
• Much faster process to get to closing
• Include appliances and cosmetics
• Up to 110% of after-improved value
• Overcome borrower concerns about property
Get the message out to those who can build yourbusiness with you.
• Realtors
• General Contractors
• Dealers
• Community Groups