203K World

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HUD 203k Consultants - Insider information

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Brent Kluge
www.203kworld.com
410.591.8300

Baltimore, columbia, Maryland, Rockville, Gaithersburg, Ellicott City, Annapolis, Bel Air, Timonium, DC, Washington DC

How to make an offer on an "As-Is" property.

Situation:

You found a home in the neighborhood you would love. The lot is perfect and the house is great, except, once you get inside, you see it has the kitchen ripped out, the HVAC was taken out of the home and there is a MOLD EXPERIMENT in the basement that would make the local botanist club jealous.  What do you do?

Fannie Mae HomePath Renovation Loan or FHA 203K?

This is a popular question in the renovation finance world: Am I better off with a Fannie Mae HomePath Renovation Loan or an FHA 203K?

The answer is quite personal. You must take into account your personal finances, the project requirements, and type of home, among other issues. I will highlight here a few of the main items for your consideration.

A 203K Renovation Loan is an amazing tool in this market. It is the only loan that allows you to buy a house in less-than-perfect condition and finance renovations with a single loan... with only 3.5% in down payment. Not to mention, it allows a homebuyer to spend up to 110% of the renovated house's appraised value – which is a nifty little tool in this market as well...

BUT... can the borrower be his/her own contractor?

A client recently had her offer accepted on a foreclosure and asked me if the house "eligible" for FHA 203K financing.

I hear this question a lot, and it reflects a common misunderstanding. Let me explain...

MOST ANY HOUSE IS ELIGIBLE FOR FHA 203K FINANCING... (so long as you and the property both fit the program guidelines, i.e. owner occupied, 1-4 unit, LTV items, mixed use, etc.)

Even if you have a home that passes an appraisal "as-is," you can STILL use the 203K to freshen it up and make it yours. It is typically not the home that limits eligibility, rather the buyer's circumstance. The key facets are:

* Owner Occupant Only – you must plan to live in the property.

* 3.5% Down payment – you must be prepared to put up 3.5% of the sales price (the minimum statutory investment)

* Meet standard FHA credit-qualifying guidelines – your 203K coach will explain these details.

If you have a home and you would like to either do a MINOR RENOVATION (mold remediation, new kitchen/bath, new carpet or paint, new roof, some windows, etc.) or a MAJOR RECONSTRUCTION (complete gut job, demolition/rebuild), then its all about the loan-to-value (LTV). The FINAL VALUE (post-renovation) cannot exceed the purchase price plus the amount spent on construction by more than 10%. As long as you have the required 110% when the project is finished, more than likely you will be good to go.

Brendan "Brent" Kluge
(National Mortgage Licensing System No. 330566)

16 Years Experience in Residential Mortgage Lending

HUD Licensed 203(k) Consultant

Contract HUD 203(k) Speaker/Instructor

HUD DE Underwriter

Licensed MHIC, Md. Home Improvement Contractor

Homebuilder since 1999

Licensed Maryland Auctioneer

Army – CW2 (Helicopter pilot / Special Forces)

203(k) Detailed Experience

With broad experience in the Baltimore-area real estate market as a homebuilder, contractor, realtor, mortgage lender, and underwriter, I have been helping clients through the renovation loan process for more than 16 years. I specialize in federal Department of Housing and Urban Development (HUD) 203K loans and have written more than 3,900 of these mortgages since 1995. In addition to working with individual borrowers, I have taught numerous classes and seminars on the 203K process for lenders, nonprofits, homebuyer groups, and HUD, as a contract speaker. I'm a certified HUD direct endorsement (DE) underwriter and licensed 203K consultant.

As a Maryland Home Improvement Commission licensed contractor, I offer a practical understanding of the renovation process and can help you navigate all facets of financing and renovating your new home. I have firsthand experience with the financial nuances of writing 203K loans and the technical requirements placed on the contractors you will hire to do the work. Working with me and my team, you'll avoid all the common pitfalls less experienced lenders encounter when trying to write these specialized mortgages.

I urge my clients to check the references of any loan officer and company you consider hiring. Always request their NMLS license numbers and confirm they don't have a history of complaints... When you choose Brent Kluge & Company, you can be CONFIDENT you've placed your home project is in the hands a team with the experience and leadership to ensure a smooth 203K loan and renovation process.

The FHA 203k loan is the single best finance tool available in today's market which allows you the flexibliity to finance a property that will not pass an appraisal inspection or is in otherwise, less than perfect condition.  This loan gives you money to buy the home and fix it up, all in one loan, with one settlement.  Here are just a few advantages to this versitile program:

• Down payment is only 3.5% and fees are nominal.
• Use this loan to PURCHASE a new home or as a REFINANCE tool and renovate your existing home!
• Eligible improvements include putting on an addition, finishing the basement, mold remediation, structural repairs, new bathrooms and kitchens, or just minor renovations like fresh paint and carpet.
• Eligible properties are vast, to include standard residential properties,  1-4 units, mixed-use, and even condos.
• The program has parameters in place to protect your interests throughout the process and limit the intimidation or uneasiness associated with a renovation/rehab project.

This program is so flexible, almost ALL properties can utilize an FHA 203k for financing, as long as the property has at least one unit that is occupied as the primary residence of the borrower.  Instead of diagnosing if this loan is a fit for you, just give us a call and discuss your project with one of our experienced 203k Coaches.  The service is free and only takes a few minutes.  We would be delighted to assist you.