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Presentation on theme: " 203K & 203K-Streamline."— Presentation transcript:

1 203K & 203K-Streamline

2 Ideal for borrowers who: o Are interested in buying a property that needs repairs or would benefit from remodeling o Are existing homeowners that need funds to rehabilitate/remodel their property o Want to save time and money by financing the purchase or refinance with the cost of repairs o May not qualify for a conventional loan o Have low to moderate income

3 Who are first-time homebuyers Have credit blemishes Have limited cash for down payment or closing costs Want to finance deferred maintenance or future wanted/needed changes to home

4 Streamline - Up to $35,000 in rehab costs Includes the 203k fees and contingency reserve Full - Capped only by prevailing FHA maximum mortgage amounts

5 Full: Large & Small Dollar Projects Frame of Home Foundation of Home Requires HUD Consultant Upfront Fee for Consultant Streamline: $35,000 or less including the fees and contingency Nothing with Frame Nothing with Foundation No HUD Consultant No Upfront Cost

6 Full: FHA loan limits Room Additions Attached Garages All Streamline Repairs Streamline: Max. of $35,000 with fees and contingency Electrical & Plumbing Furnace & A/C Finish Basement Update Kitchen/Baths Paint, Carpet, Floors Roof, Siding, Window

7 Luxury improvements that do not become a permanent part of the real property: o Examples: No Swimming Pools No Hot Tubs No Saunas No Trees, Shrubs, Flowers Home Theatre Systems

8 Borrower obtains credit approval from iLoan Borrower chooses propertyif purchase Borrower obtains bids for labor and/or materials for desired or required projects Property appraisal is completed, reflecting After Improved value For refinances the same appraiser may need to provide a second appraisal stating the As Is valuemay not be required in all cases Complete file, with bids, is submitted to iLoans investor Loan Closes

9 Loan is purchased from iLoans investor by Bank of America Funds are disbursed - schedule of reimbursements is dependent on program Streamline - Up to 50% of bids disbursed at close to pay for materials only--balance paid when all work is completed Full - Up to 5 draws as work completed

10 Streamline - initial investor disburses initial draw of up to 50% of bids & Bank of America will pay out the balance when the project is completed Full - Bank of America handles all draws and withholds 10% of each draw until final draw is paid for the completed project

11 Borrower and contractors must sign homeowner/contractor agreement Must Get the Following from Contractors: o Copy of current license o Copy of current liability insurance o Resume o W-9 o Two Referencesresidential projects

12 Bids: o Must be detailedthink sworn construction statement o On contractors letterhead o Initialed by borrower o Break out cost of labor and material o Usually only need one bid on Streamline o Full KHUD Consultant may require second set of bids

13 Self-help (owner improvements) is allowed on a limited basis Contractors must be licensed and insured Work on the home must begin within 30-days of closing Work to be completed within 6-months of closing

14 10-20% contingency reserve, determined by underwriter Standard FHA upfront & monthly MI No cash out allowed Max. loan amount up to regional FHA limits Fixed 30-year term only

15 Supplemental Origination Fee o $350 or 1.5% of repairs whichever is higher o Block 1 of GFE Title Update-$50 per draw o Must always disclose min. of 1 in block 4 of GFE Inspection Fee-$150 per draw o Must always disclose min. of 1 in block 3 of GFE HUD Consultant FeeFull 203k Only o Cost will range based on cost of project o Must disclose total cost in block 6 of GFE o This link will allow you to look for consultants

16 Standard FHA guidelines apply Manual UW approval Must Get an Approve on Automated UW 620 Credit Score 31/43---Housing/Debt Ratios Reserves only required on 3-4 unit properties Max LTV for purchase is 96.5% sale price and rehab costs or 110% of appraised value whichever is lower Max LTV for refinances is 97.75% after improved appraisal or costs whichever is lower Can Have Co-Borrowers o No Other FHA Loans o (borrower and co-borrowers)

17 Refinance o Two Appraisals o As Is Value May use taxes Very rare UW Decides o After Improved Value Factors in the value of improvements Purchase o Typically One o After Improved Value Factors in the value of improvements o As Is Value = Sale Price o All normal FHA flipping rules apply to possible second appraisal!!!

18 Allowed: 1-Year Old and Have Been Lived In FHA Approved Condos PUDstownhouses Single Family 2-4 Units o Must occupy one unit REO properties o Restrictions apply Not Allowed: No Spot approved condos Homes that have never been lived in. Investor Owned Property Manufactured Log Homes Completely demolished homes including the foundation Condotels

19 Get permission to have contractor/consultant enter home as early in the process as possible o BIGGEST DELAY WE SEE! Purchase Price is the Price Paid o Dont have to disclose cost of repairs Can Get Up To 6% Seller Concessions (pending change by FED) o Based on the sale price only--not repairs o For: closing costs & prepaids Please disclose that loan is a K FHA loan o Implies no issues with work orders for seller Ask for 45-day window to close from accepted offer!!!!!

20 If we have the bids, we can order appraisal Appraisal o Appraisal is ordered through iLoans investor o Flipping rules apply to all filesUW may require two With P.A. and Docs, we can submit to underwriting o Appraisal can come in later Get Approval with Conditions Clear Conditions Close Deal

21 Sale Price $150, Repairs $ 20, % Contingency $ 2, Final Inspectionper draw $ Title Update-per draw $ Sup. Orig.(1.5% or $350) $ Total Cost = $172, % LTV or 3.5% Down - $ 6, Base Loan without MI = $166, Upfront 2.25% + $ 3, Total Loan with Upfront MI = $170,257.24

22 Payoffs: o First Mtg. $175, o Second Mtg. $ 17, Closing Costs & Prepaids $ 7, Repairs $ 16, % Contingency $ 1, Final Inspectionper draw $ Title Update $ Sup. Orig./Draw Fee (1.5% or $350) + $ Total Cost = $218, Upfront 2.25% + $ 4, Total Loan Needed = $223,809.91


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