All Forum Posts by: Bill Rich

Wayne, yes the property may or may not be advertised as a HUD $100 down candidate you can very easily submit the offer making it a $100 down loan even when it's not marketed as such. I've done several times on HUD properties around the country with my mortgage clients. Sometimes the buyers agents aren't well versed on REO and that's where I can help from the mortgage side with buyers.

Hi Jay

In my experience I can tell you this scenario screams 203k and that the seller needs to be educated on the loan options available. If indeed it is a HUD home it could be the asset manager that is making this go conventional for they are looking for a fast close. If it is a HUD sale it would be listed on the HUD HomeStore and there would be reasons why the financing type is selected. I have seen scenarios where they only will accept a conventional loan and then will allow it to be changed to renovation financing once it's confirmed by the inspector it needs to be a renovation loan (I know, it makes no sense but then again no one has ever accused the federal government of using common sense eithe lol).

One thing to note HUD also allows for $100 down versus the standard 3.5% thats required.

I licensed in Tennessee and would be happy to help your friend. 

 Dennis

If your having a hard time finding the financing you need give me a call. Mortgage guidelines allow for full cash out off of full appraised value after 6 months. 

@Joe White Thank you!

@Dennis M. the seasoning requirement is actually 6 months not 12 months, just an FYI

@Julie Tonioni unfortunately if you are indeed trying to pull additional cash out above and beyond what you purchased the home for then you would need to have owned the property for 6 months.  This is a Fannie Mae/Freddie Mac guideline and a guideline that 99% of the mortgage industry follows.  You can do delayed financing which allows you to recoup the money you put into the home for the purchase and rehab.  You can however start the application process, get everything in place (loan approval, appraisal etc) so that once the 6 month mark hits you can close immediately once the 6 month mark hits.  I have done this a few times for clients in this position in the past.  Essentially process the entire application and close on day 181 (6 months x 30 days = 180 days). I hope this helps a little and if you have any questions please feel free to reach out to me.  I am licensed in CT and would be happy to help you.  

I lend direct so I lend off my companies own rate sheets, and conventional rates are better for me.   Par rate for a 30 year fixed conventional is around 4.25%-4.375%.

Overall both the FHA 203K and the Fannie Mae HomeStyle are great programs. IMO one is not necessarily better than the other. Its really more about what is the best fit for the individual (credit score, DTI, down payment, etc.). One key thing that no one thinks about with FHA loans (all FHA loans, not just 203Ks) is the self-sufficiency rule, which applies to 3 and 4 family homes. In order to pass the self-sufficiency test, you'll need to prove that 75% of the rental income you're likely to receive (including the unit you would occupy) will exceed the full monthly mortgage payment. That means calculating both the monthly rental income and the monthly mortgage payments.

In order to figure out the numbers, you’ll first need to get an appraiser to value the rental potential of the property at market rates. In other words, the appraiser will tell you how much rent you can expect to charge at the going rate (not at historical or actual rates).

Even more critical than the appraisal, however, is the loan calculation. In fact, correctly calculating the cost of the loan is the single most important step in the qualification process, determining how much the FHA will be willing to cover and, therefore, how much you will be able to finance.

Included in that monthly mortgage calculation are the following costs:

• Principal
• Interest
• Taxes
• Mortgage insurance
• Homeowner’s insurance

At the end of the day, your loan officer should be able to crunch these numbers properly to ensure you do not find yourself in a bad situation. You will be amazed at how many FHA experts do not know about this rule and it comes to light AFTER the contract has been written, monies paid for inspections and appraisal completed.

I have to be honest with you Shawn, FHA rates are actually higher in most cases then that of conventional loans.

Hi Nate 

I am sorry that your experience has been less then excellent. Unfortunately there are lenders out there who do not take a hands on approach to these loans AFTER closing. Its important to work with a lender who handles the entire process in-house and one who understands the complexity of the loans and has the know-how to complete the project, not just get the loan closed. For example my team actually handles the draws and works with the the borrower (you), the GC and HUD consultant (when there is one) from the beginning until the very end. My draw admin sits right next me so I know that we handle this the proper way. If you ever have any questions please let me know. If you are already working with a lender and have closed I wont be able to help too much because you are unfortunately stuck with how they process the draws.

@Account Closed actually with a 203K you are required to have begun the work within 30 days of closing and you are required to have it completed within 6 months of closing. FHA will grant extensions due to extenuating circumstances.

@Brunno Goncalves I have to be completely honest, your lender is not being true to the loan. At no time ever should you be paying money upfront as the borrower.....EVER.  This is not how the 203K or HomeStyle work.  We do not allow the borrower to pay anything upfront for we facilitate a draw when funds are needed.