Closing More Loans Using the FHA 203(k)
Loan officers and brokers are scrambling to adjust to today’s real estate market and close more loans. Besides declining markets, credit tightening, and the disappearance of loan programs, some markets are filled with foreclosed homes that have suffered from disrepair and neglect. The majority of the banks that own these foreclosed properties are unwilling to repair these homes. As such, many of these houses do not quality for traditional loan programs because the property itself does not meet the minimum standards in order to quality as acceptable collateral for most conventional loan programs.
Smart professionals take advantage of this situation to actually increase their mortgage business by offering borrowers what their competitors do not: a powerful and relatively underused loan program known as the 203(k). This rehabilitation loan is insured by the Federal Housing Agency (FHA).
This loan program provides the funds necessary for both the purchase and the renovation of a home. The maximum loan amount depends on county-based loan limits determined by the Department of Housing and Urban Development. On the low side, a single family home in New Mexico, for example, has a loan limit in most counties of $271,050; while in California, the maximum loan amount for a single family home is set at $729,750. HUD county limits can be found at https://entp.hud.gov/idapp/html/hicostlook.cfm.
Some loan officers or brokers might not want to deal with 203(k) loans due to the belief that they are hard and time consuming. While it’s true that more work is involved, that extra effort can translate into income you wouldn’t otherwise have. Also, most 203(k) loans can close within 30-60 days from start to finish.
Reasons to use a 203(k) loan may include:
* Energy Efficient Program: Finance 100% of the cost of eligible energy efficient improvements; maximum $8,000; No Additional Credit Qualification Required.
* Credit Scores as low as 500.
* SFR, Condos and Townhomes allowed.
If you are a real estate professional wanting to help more borrowers get into a home, the FHA 203(k) could be a key ingredient to your success.
Tags: high interest savings account, savings bond, high interest savings, high yield savings account, online savings account, health savings accounts