Using Chat GPT for Lender Conversations

[Benjamin Sulka]

Hey BP Forums! 

Wanted to share something interesting with the lending community and get your take on it. I was preparing for a conversation with a lender regarding FHA 203(k) loans. I have a basic understanding of the loan product (income, credit score, loan limits, etc.) but wanted to ask more in-depth questions that I may not have considered.

What I asked ChatGPT

Prompt: I'm having a conversation with a lender about the FHA 203(k) renovation loan to use to buy a property. What would be beneficial questions to ask the lender about this product?

AI Answer: 

1. Eligibility Requirements: What are the qualifications needed to apply for this loan? Are there any specific criteria I need to meet?

2. Loan Types: Are there different types of FHA 203(k) loans available? Which one would suit my needs best?

3. Loan Limits: What are the maximum borrowing limits for this loan program? How are these limits determined?

4. Property Eligibility: Can this loan be used for any property, or are there limitations regarding the type or condition of the property?

5. Renovation Allowance: How much of the loan amount can be allocated for renovations? Are there any restrictions on the types of renovations allowed?

6. Interest Rates and Terms: What are the interest rates for this loan? Are they fixed or adjustable? What are the repayment terms?

7. Down Payment and Closing Costs: What are the down payment requirements for this loan? Are there any assistance programs available for closing costs?

8. Process and Timeline: What is the application process like? How long does it typically take to get approval and close on the loan?Contractors and Inspections: Are there specific requirements for contractors? What is the process for inspections and releasing funds for renovations?

9. Financial Requirements: Are there any financial qualifications or credit score benchmarks I should aim for to secure this loan?

10. Additional Fees: Apart from interest rates and closing costs, are there any other fees associated with this loan?

11. Escrow Account: Will an escrow account be set up for renovations? How will disbursement of funds for renovations be managed?

12. Exit Strategy: Is there any specific timeline or requirement for completing the renovations? What happens if the renovation isn’t completed within the specified period?

13. Risks and Protections: What are the potential risks associated with this loan? Are there any protections or contingencies in place if issues arise during renovations?

14. Documentation Needed: What documents will be required during the application process?

Remember, discussing these aspects in detail with your lender can provide a clearer understanding of the FHA 203(k) renovation loan and ensure it aligns with your needs and goals.

__________________________________________________________________________

Would love to hear if any lenders scrutinize any of these questions or would add any additional ones! 

-Ben, aspiring rental property investor 

[Caroline Gerardo]

203k is a cookie cutter loan. There are two shades of 203k, no major overlays or differences in lender shops. It's full doc with IRS returns 2 years/W-2/1099/paystubs/bank statements/ID, your FICO is part of the rate, you must have a licensed contractor, all require impounds and PMI forever. Loan limits vary by county but you need a JOB in the county. Risk is not getting the work done during the timeline. This is owner occupied only. You don't need CHAT GPT

[Benjamin Sulka]

Quote from @Caroline Gerardo:

203k is a cookie cutter loan. There are two shades of 203k, no major overlays or differences in lender shops. It's full doc with IRS returns 2 years/W-2/1099/paystubs/bank statements/ID, your FICO is part of the rate, you must have a licensed contractor, all require impounds and PMI forever. Loan limits vary by county but you need a JOB in the county. Risk is not getting the work done during the timeline. This is owner occupied only. You don't need CHAT GPT

 No worries, I'm well aware!! Was just doing some experimentation and then testing the accuracy. 

Thanks for your response.