Property Damage & Disaster Restoration Blog: Long Island & New York City

Completing Your Dream Home with the FHA 203K Loan

Posted on Wed, Dec 09, 2009 @ 04:05 PM
Another challenge with the existing home inventory on the market is the condition of the property.  Whether it is REOs, foreclosures, short sales, or not, less people are presenting homes for sale in pristine condition.

The FHA 203k loan can help. The 203k can give the buyer the ability to have one loan to purchase and renovate their home at the same time.

Similar to a traditional mortgage with a construction loan added on top, the 203k can be used for the following:
  • Remodeling bathrooms and kitchens (even built-in appliances) 
  • Replacing a roof, gutters and downspouts
  • Adding a second story, afamily room,another bath, etc.
  • Completing a basement or attic
  • Upgrading plumbing, heating, air conditioning or electrical service
  • Installing new siding, energy efficient windows and doors
  • AND MUCH MORE!
It is important to hire a general contractor that is familiar with the 203k process and requirements.  Advanced Restoration Corporation, a 203k contractor, was recently featured on NBC News4 New York regarding 203k loans, along with Continental Home Loans.

For more information on 203k loans in New York, please contact the following:

203k Contractor:
Company:  Advanced Restoration Corporation
Contact:  Gary Matzelle
Phone:  (516) 903-4107
Email:  [email protected]

Mortgage Banker:
Company:  Continental Home Loans
Contact:  Robert Flower
Phone:  (917) 584-9292
Email:  [email protected]

Looking for REO/Foreclosures?
The REO People
Thomas Becker (Licensed Real Estate Salesperson)
Phone:  (631) 873-8150
Email:  [email protected]

Tags: disaster, foreclosure, 203(k) loan, property damage, restoration companies, fha, hud loan, reconstruction, restoration, homeowner tips, restoration company, disrepair, resources, refinance, 203k, hud, 203k streamline, rehab

Why Renovate With a 203K Streamlined Loan?

Posted on Mon, Sep 28, 2009 @ 02:19 PM

Because You Can!

I'll keep this very brief...


You are purchasing a home that needs minor repairs (repairs under $35,000 qualify for a streamlined loan). Incorporating the rehab into your mortgage payment allows you to have just one payment. Some highlights include:

  • Loan amounts up to 110% of the home's appraised value; renovation amounts up to $35,000.
  • No work write-up, no inspection required if repairs are less than $15,000 and no HUD consultant required.
  • There is no longer a minimum of $5,000 in repairs for a 203K Streamline.
  • On a 203K Streamline, up to 50% of the rehab amount can be requested immediately following the closing. After closing the work can start.
  • For a 203K Streamline, there is a maximum of 2 draws per contractor.
  • Loan can be used for many improvements, including repair/replacement of: roofs, plumbing, electrical, flooring, minor remodeling, windows, doors, etc.
  • Available for mortgage refinance transactions including those where the property is owned free and clear.

203K Streamlined Loans are available through HUD approved lenders. For more information on how Advanced Restoration can be your 203k contractor, please contact Gary Matzelle at (516) 903-4107.

Tags: foreclosure, 203(k) loan, mortgage, fha, advanced restoration, disrepair, rebuild, home repair, buying a home, 203k, hud, 203k streamline, rehab

Rehab Your Foreclosure with a 203k Loan!

Posted on Wed, Aug 19, 2009 @ 05:05 PM

You are thinking about buying a home foreclosure on Long Island, but the properties you are looking at need serious rehabilitation.
What Can You Do?

You may want to apply for an FHA 203(k) restoration loan through an approved lender!
The purchase of a house that needs repair is often a catch-22 situation, because the bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased.

HUD's 203(k) program can help you overcome this obstacle by enabling you to purchase or refinance a property plus the cost of making the repairs and improvements in one mortgage. The FHA-insured 203(k) loan is provided through approved lenders nationwide and is available to persons wanting to occupy the home.

The downpayment requirement for an owner-occupant (or a nonprofit organization or government agency) is approximately 3.5% of the acquisition and repair costs of the property.

The 203(k) loan includes the following steps:

A potential homebuyer locates a fixer-upper and executes a sales contract after doing a feasibility analysis of the property with his/her real estate professional. The contract should state that the buyer is seeking a 203(k) loan and that the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.

The homebuyer then selects an FHA-approved 203(k) lender and arranges for a detailed proposal showing the scope of work to be done, including a detailed cost estimate on each repair or improvement of the project.

The appraisal is performed to determine the value of the property after renovation.

If the borrower passes the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs. The amount of the loan will also include a contingency reserve of 10% to 20% of the total remodeling costs and is used to cover any extra work not included in the original proposal.
At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.

The mortgage payments and remodeling begin after the loan closes. The borrower can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it is estimated to complete the rehab.

Escrowed funds are released to the contractor during construction through a series of draw requests for completed work. To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines their will be no liens on the property. It is essential for a borrower to select a general contractor (restoration company) that is familiar with the 203k loan process, including the required forms and documents.

Streamlined 203k Loan
FHA's Streamlined 203(k) program permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.


Advanced Restoration Corporation is a full-service property restoration contractor with the ability and 203(k) knowledge to provide complete Rehabilitation & Restoration services to your new home or refinance! We service the New York Metro area (Nassau County, Suffolk County and the NY Boroughs).

For more information about 203(k) loans and mortgage professionals authorized to generate FHA 203(k) loans, please contact Gary Matzelle at (516) 903-4107.

Tags: foreclosure, 203(k) loan, property damage, water damage, advanced restoration, reconstruction, restoration, restoration company, disrepair, rebuild, home repair, buying a home, refinance, 203k, hud

203k Loans Made Simple? Yes, for Your Clients

Posted on Wed, Jul 15, 2009 @ 05:48 PM

Excellent article on 203k loans...

Source: Colleen Craig
Santa Clarita, CA
More about Colleen…
Southern California Mortgage Professional
Office Phone: (661) 310-8536
Cell Phone: (661) 310-8536
Email Colleen
http://www.colleencraig.com

203k MADE SIMPLE?

Okay, maybe not, but I will attempt to make it as simple as possible for the client to understand and want to read on. For many of us in the business who are " in the know" we forget that we need to go back to the basics and spell it out in simple terms for others to understand. So I've compiled some information based on my most recent commonly asked questions just this week.
In Southern California, FHA loans were just not utilized over the past 10 or so years because of the FHA Maximum Mortgage limits But now that the limits have been increased and the prices have decreased, FHA loans have become the most utilized loan in recent months. HOWEVER, because it was not a popular loan, you would be amazed at how many lenders/brokers do not know what they are doing. Especially when it comes to the 203k loan. I spoke to a client today that was given such mis-information it made me cringe.

Apparently they told the client that 203k loans were no longer being done (Gee, you think it was after realizing that they had no idea what they were doing?) and they tried to flip them into another loan. This was after telling my client that their loan amount would be for the contract price and the extra money would just be separate and sit in an impound account to be disbursed over the next 6 months. Okay partially true, the extra amount would be in escrow to be disbursed as the remodel progressed, but for free? Who pays for the extra 50,000 dollars you just borrowed for repairs? Your loan amount is for the entire amount you are borrowing. Makes sense right?

So what is a 203k loan and why use one?
When a buyer wants to buy a home that needs repairs utilizing FHA financing, normally the repairs would have to be completed prior to the close of escrow. The repairs would normally fall on the responsibility of the seller. With so many foreclosures in today's market, the bank is the seller. And many times the home in need of repair is listed "as is". Which in the past would require a cash buyer or conventional financing. This is another reason that people in the business decided to shy away from FHA loans. I believe it was pure ignorance of the programs that were available by the brokers and the realtors couldn't properly prepare their seller for what to expect that gave FHA loans a bitter taste.
My associate Jeff Belonger said it best in his post about ignoring what your listing agent tells you about FHA loans
Here we go....203k loans for dummies

* 203k loans allow you to FINANCE the cost of the repairs in the new loan amount. (Not to exceed 110% of the after improved value determined by the appraiser and 203k consultant) What does this mean? I buy a house for 200,000 that needs 50,000 in repairs and I can borrow the extra 50,000? Too good to be true? NOPE. That's it in a nutshell....
details please.........

* Down payment is based on the sale price PLUS the final cost of the repairs x 3.5% so for example:
Sale price is 200,000 (DO not calculate 3.5% on this) PLUS 50,000 in repairs/costs (which includes certain costs and reserves the lender will require) 250,000 x 3.5%. Down payment is $8750.00 (closing costs are separate as usual)

* Buyer will hire (lender can recommend) a HUD approved FHA 203k Consultant to go to the property with the buyer to determine the required repairs and wish list repairs.
The fee charged by the consultant can be included in the mortgage. The fee can range anywhere between $ 400 to $1200 depending on the repairs required. Please check with the consultant prior to scheduling your appointment.

*Buyer will obtain estimates from several licensed contractors for the work to be completed depending on how extensive the repairs.
Three estimates are recommended for each contractor but not necessary. The buyer can act as their own general contractor only if experienced and licensed. (FHA says experienced, but most investors require the buyer to be licensed) The contractors must provide documentation to be approved by the lender prior to approval.

The consultant will determine the "required" repairs versus the "wish list repairs". You must start with the required repairs and then move on from there for you wish list. This is an important step for the consultant and appraiser so that you don't over improve the home and exceed the comparable properties in the area.

* Once the consultant completes his report of required and wish list repairs, the lender will forward it to the appraiser for an "After Improved Value". This is where you may run into problems with OVER improving the property based on current values. Between the consultant, appraiser and buyer - the FINAL FINAL report will be tweeked to come up with a final report that the contractors will be hired to do.

* So now the file is submitted to underwriting and approved ( you need to qualify at the full amount you are borrowing of course, which may include your current mortgage payment for the home you will live in during the rehab period) and the normal steps for closing will occur.
(BIG PLUS - you can include 6 months of mortgage payments in the new loan amount since it's assumed that you will have TWO housing payments during the rehabilitation of the new home. This money will be deducted each month during the reahab process) This is optional.
* Closing occurs, and the work begins within 30 days of closing/funding. (This is when your mortgage payments start since this is when you started borrowing the money - however, if you included the 6 mths mtg payments, they will be deducted from escrow starting when your first payment is due)

* Disbursements are made throughout the following 6 months from the escrow account (normally 4 draws with one final inspection, but this can be increased for higher repair amounts) as the work is completed.

Remember you paid the seller for the price of the home, and then you borrowed an additional amount of X which is sitting in an escrow account to pay the contractors (your total loan is the total amount you borrowed)

Once the last disbursement is made and the final inspection showing COMPLETED AS PER THE CONTRACT........you are done! Simple as 1 2 3 - okay maybe not, but that's why having an experienced lender on your side is crucial!

There are specific properties and repair requirements for this type of loan, so please call me for specific details if this sounds like the right loan for your new home.
Please send me your before and after pics! I would love to see them and maybe even post them for people to see what can be done with this awesome program! Or contact Colleen Craig FHA 203k Specialist for more details

Happy Rehabbing!


Advanced Restoration Corporation is a full-service restoration contractor with the ability and 203(k) knowledge to provide complete Rehabilitation & Restoration services to your new home!

For more information about 203(k) loans and mortgage professionals authorized to generate FHA 203(k) loans, please contact Gary Matzelle at (516) 903-4107.

Tags: 203(k) loan, property damage, restoration companies, fha, advanced restoration, advanced restoration corporation, reconstruction, homeowner tips, disrepair, home repair, refinance, 203k, hud

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