203k power point

203K & 203K-Streamline www.kencaiani.com

• Ideal for borrowers who: o o o o o

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

• • • •

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

• Streamline - Up to $35,000 in rehab costs

 Includes the 203k fees and contingency reserve

• Full - Capped only by prevailing FHA maximum mortgage amounts

• 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

• 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

• 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

• Borrower obtains credit approval from iLoan • Borrower chooses property—if 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” value—may not be required in all cases • Complete file, with bids, is submitted to iLoan’s investor • Loan Closes

• Loan is purchased from iLoan’s 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

• 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

• Borrower and contractors must sign homeowner/contractor agreement • Must Get the Following from Contractors: o o o o o

Copy of current license Copy of current liability insurance Resume W-9 Two References—residential projects

• Bids: o o o o o o

Must be detailed—think sworn construction statement On contractor’s letterhead Initialed by borrower Break out cost of labor and material Usually only need one bid on Streamline Full K—HUD Consultant may require second set of bids

• 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

• 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

• Supplemental Origination Fee o o

$350 or 1.5% of repairs whichever is higher 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 Fee—Full 203k Only o o o

Cost will range based on cost of project Must disclose total cost in block 6 of GFE https://entp.hud.gov/idapp/html/f17cnsltdata.cfm  This link will allow you to look for consultants

• • • • • • •

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 o

No Other FHA Loans (borrower and co-borrowers)

• Refinance Two Appraisals “As Is” Value  May use taxes  Very rare  UW Decides o “After Improved” Value  Factors in the value of improvements o o

• Purchase Typically One “After Improved” Value  Factors in the value of improvements o “As Is” Value = Sale Price o o

o

All normal FHA flipping rules apply to possible second appraisal!!!

• Allowed:

• 1-Year Old and Have Been Lived In • FHA Approved Condos • PUD’s—townhouses • 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

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Get permission to have contractor/consultant enter home as early in the process as possible o

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Purchase Price is the Price Paid o

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Based on the sale price only--not repairs For: closing costs & prepaids

Please disclose that loan is a “K” FHA loan o

•

Don’t have to disclose cost of repairs

Can Get Up To 6% Seller Concessions (pending change by FED) o o

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BIGGEST DELAY WE SEE!

Implies no issues with work orders for seller

Ask for 45-day window to close from accepted offer!!!!!

• If we have the bids, we can order appraisal • Appraisal o o

Appraisal is ordered through iLoan’s investor Flipping rules apply to all files—UW 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

• • • • • • • • • • •

Sale Price $150,000.00 Repairs $ 20,000.00 10% Contingency $ 2,000.00 Final Inspection—per draw $ 150.00 Title Update-per draw $ 50.00 Sup. Orig.(1.5% or $350) $ 350.00 Total Cost = $172,550.00 96.5% LTV or 3.5% Down - $ 6,039.25 Base Loan without MI = $166,510.75 Upfront MI @ 2.25% + $ 3,746.49 Total Loan with Upfront MI = $170,257.24

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Payoffs: o o

• • • • • • • • •

First Mtg. $175,000.00 Second Mtg. $ 17,850.00

Closing Costs & Prepaids $ 7,500.00 Repairs $ 16,350.00 10% Contingency $ 1,635.00 Final Inspection—per draw $ 150.00 Title Update $ 50.00 Sup. Orig./Draw Fee (1.5% or $350) + $ 350.00 Total Cost = $218,885.00 Upfront MI @ 2.25% + $ 4,924.91 Total Loan Needed = $223,809.91

www.kencaiani.com