All Forum Posts by: Jeshua Patrick

Michael Ablan great idea about the 203k loan. Kelsey Nigg a couple things to keep in mind if you do this as I have done one myself. You will need a contractor to do the work or pass the checks from the bank to you. I paid a small fee to the contractor that did mine. The bank will require inspections for payout but these will not be done by the contractor. What will need to be done by the contractor is a repair estimate and cashing/reissuing the checks. Also, if you are trying to do the work yourself, you will need the repair funds in reserve as the bank will not release funds until work is done. They do allow a limited number of draws and work must be done in 60 days from close so don't bite off more than you can chew. Finally, this is an FHA loan so you will have a one time 1.5% fee upfront and PMI for the life of the loan which is charged at a higher rate than PMI on conventional loans. Prepare to refinance this loan quickly into a conventional loan.

Deadrick Colbert my realtor would never leave me hanging for a few weeks and he is a top ten producer nationally.

Giang Nguyen the $100 down option may not be available to investors. It is often an option for owner occupants however. Owner occupants must occupy for a minimum of 12 months. I have done two HUD deals from an owner occupant position. Both deals were different as there was a different agency managing the property for HUD each time. The first time also had a repair escrow that I had to fund up front and could only recover after repairs were completed. The second deal was a 203k with a terrible lender, loan officer actually, and was the one I learned about the appraisal issue with. What I can tell you is that it is a learning process and an experienced realtor should make the process smoother. Make sure all the paperwork is right the first time. Also, make sure you have your ducks in a row as they expect additional paperwork requests to be received within 24 hours of the request date. Great deals to be had if you can tolerate the hassle.

This is why it's really important to have an agent you trust explicitly. I have experienced multiple types of realtors and thankfully I have an amazing realtor. The worst thing you can have is a realtor that tells you what they think you want to hear. This type of realtor is lazy and will not pull a sufficient amount of comps. If you think you may have this type of realtor, ask a couple other realtors for comps and see how they compare. Go with the one who was the most thorough and honest even if it wasn't what you wanted to hear.

Frank Romine would you expound on the main differences between debt and equity deals as you see them for us newbies?

I'm no expert but it looks like the upside may be more in favor of selling for tax reasons; however, there may be ways around that. A consultation with a good tax and/or RE attorney in your area would probably be worth your money.

Giang Nguyen are you planning to take advantage of a $100 down, if available, or do you intend to do a larger down payment 3.5% down? I did a $100 down, 203k loan about 4 years ago and it was difficult but only because the loan officer made it so. The most important thing to understand about the process is that HUD's appraisal is typically only for their target price and not based on actual value. That said, you MUST make sure your loan officer pulls a new appraisal conditioned on the declared repairs you are including in your 203k loan. Insist on this immediately. If you do this it will speed things up tremendously so long as the new appraisal comes in where it needs to. If it doesn't you know you are in trouble and should reconsider your purchase even if it costs you a small escrow deposit.

JP P. The changes took effect a little over 4 years ago, a week after I signed my loan application on my current house. Justin Jolliffe those rates wouldn't surprise me for FHA depending on the amount of the loan. I know they have raised the PMI rate significantly since 2009. The rates climbed significantly from my first home purchase in 2009 and my current purchase in 2013 and likely have climbed again since.

It is all negotiable and a reputable contractor should be used to estimate cost. As to going the DIY route, check your state and local ordinances. Some areas, like mine, require that certain tasks such as electrical be done by a licensed electrician.

What makes FHA loans even worse now is that, unlike old FHA loans, servicing banks are no longer allowed to do discretionary in-house conversions from FHA to conventional to drop the PMI.