203K Streamline. Help qualified borrowers purchase or refinance AND renovate..with a single loan!

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1 203K Streamline Help qualified borrowers purchase or refinance AND renovate..with a single loan!

2 Why FHA 203K Streamline Offers a solution that helps borrowers obtain financing that covers both the acquisition & rehabilitation of a property Helps borrowers save time AND money Avoid construction loans Can borrow against the VALUE of the property after improvements

3 Why FHA 203K Streamline Do you have limited cash for down payment or closing costs AND repairs? Do you want to improve your home and your neighborhood? Do you wish to improve the energy efficiency of your home?

4 Target Markets Borrowers purchasing a home in need of rehabilitation REO s, foreclosures, and short sales Out-dated kitchen, bathrooms, etc Borrowers refinancing existing home and making improvements Improve instead of move

5 Program Eligibility Owner-occupied 1-4 unit properties, PUDS & Condo s Property must be a least one year old Can be used with HUD REO program Can be used with EEM Mortgages

6 Program Eligibility Types of Mortgages 30-year fixed rate mortgages Seller contributions allowed up to 6% Standard FHA investment required 96.5% purchase / refinance All loans must be run through Total Scorecard Owner occupied purchase or rate/term refinance

7 Qualification 31/43% qualifying ratios (may be exceeded with AUS approval) Minimum 3.5% Down Payment (Standard Purchase) Cash reserves are not required on 1-2 unit properties 3-4 unit purchase transactions require 3 month reserve County loan limits apply

8 Qualification Credit Score 640 Full documentation required to meet FHA standard guidelines Income & Assets same as standard FHA guidelines

9 One month current pay stub, each job 2 yrs tax returns & W2 s 2 mos. asset account statements Copy of 1 st & 2 nd mortgage statement Divorce Decree & BK papers Standard Documents Needed for Qualification for FHA Letter of explanation on any derogatory credit Copy of your Drivers License and Social Security Card Name, Address and phone number of your Landlord for the past 12 months.

10 General Guidelines Finance up to $35,000, including fees and contingency reserve, into mortgage to make improvements NO minimum cost of rehabilitation Initial draw is disbursed at closing (50%) Final draw is disbursed after improvements are completed

11 Energy Efficient Mortgage The EEM improvements will be based on the lesser of 5% of the property value (after improved) or the $8,000 $2,000 more for weatherization items. Increases total rehab to $45,000 $8,000 / $10,000 Improvements may include: Windows, Doors, HVAC Systems, Furnaces, Solar Panels, etc Must be cost effective! The monthly energy savings must be greater than the payment increase based on a CEC approved Certified HERS.

12 Eligible Improvements Repair or Replace: Roofs; gutters; and downspouts Finish flooring & NON-structural sub-flooring Upgrade or Replace Plumbing and/or Electrical Systems Heating, ventilation & air conditioning systems Utilities must be ON during inspection

13 Eligible Improvements Painting Interior/Exterior Including lead-based paint stabilization or Abatement of lead-based paint hazards Bathroom & Kitchen remodels No Structural Repairs

14 Eligible Improvements New Appliances Range and/or Oven, Range Hood, Microwave Refrigerator, Washer/Dryer, Trash Compactor, etc Disability Accessibility Lower counter/cabinet height, wheelchair access ramps, widening doorways Windows & Doors Exterior Improvements Decks, Patios, Porch, Fence..

15 Eligible Improvements Basement Waterproofing & Remodeling Including adding walls & bathrooms Remember NO Structural Elements Mold Abatement Termite Treatment Connection to Public Water or Sewer Septic Tank or Well Systems

16 INELIGIBLE Improvements Luxury Items Swimming pools, hot tubs, tennis courts, gazebos, Bar-B-Q pits, saunas. (Pools must be in good working order at time of appraisal inspection) Solar Panels To heat a pool or spa Driveway or Sidewalk Adding or repairing

17 INELIGIBLE Improvements Posts in crawl spaces Cannot be replaced Landscaping Major landscaping or site improvements Structural Damage New Construction No room additions or reconstruction Relocation of load bearing walls No repairs that require detailed drawings/plans

18 INELIGIBLE Improvements Repair or Improvements that will require more than 6 months to complete or will displace the borrower for more than 30 days Properties must have running water Electricity - cannot be shut off for long periods Cannot have missing doors or roof Must have heat source Work that will NOT begin within 30 days of closing Repairs that will require more than TWO draws

19 Contingency Reserve Streamlined 203K Optional BUT City 1 st will require Used to cover unplanned costs that arise during construction A minimum 10% of the cost of rehabilitation If not used (after all construction is complete) will be applied to principal

20 Borrower Self-Help Borrower must be qualified and approved to do the work Work must be completed no more than six months after closing Contractor bids must be provided as back-up Self-Help agreement must be signed If using a home improvement store, ie Home Depot No W9 required Checks are made out to borrower who is acting as General Contractor. (With receipts)

21 Application Process Lender Pre-approve borrower Disclose 203K fees properly on GFE; Supplemental Origination Fee; Inspection Fees; Title Update Ensure all permits are obtained Ensure rehab work meets program requirements Ensure cost of repairs are reasonable/customary for area Determine if borrower meets self-help requirements Determine contingency reserve Borrower Select Home Provide standard credit documentation Select Contractor Obtain cost estimates Obtain necessary permits Sign Homeowner/Contractor Agreement

22 Loan Flow Application taken with all 203K Forms Submitted to underwriting.. Loan is approved Conditions cleared & loan closes Credit approval; AUS approve/eligible Appraisal received by lender with asis & ascompleted values Construction begins within 30 days of loan closing Request FHA Case #; CAIVRS; LDP, GSA Appraisal ordered copy of bids provided to appraiser

23 Frequently Asked Questions

24 Frequently Asked Questions How long does the disbursement process take? 1 st Disbursement can be done at closing Final business days if everything is complete Are there additional fees? Yes, Supplemental Origination Fee (investor gets) Title updates; inspection fees; contingency How does the contractor get paid? Joint check over-nighted to borrower cannot be wired.

25 Frequently Asked Questions Who orders the inspections? City 1 st UW will pick inspector Servicing Lender will order Who orders the title updates? Servicing Lender will order What happens when the work has been completed? Welcome packet with disbursement guide sent out; final completed; funds disbursed

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