Danny Salas

Archive for the 'Mortgage Industry Updates' Category

203(k) Loans – Turning Potential Dreams…Into Real Ones

Fix Your Home Into Your Dream

What Are 203(k) Loans?

The Federal Housing Administration (FHA) insures loans that enable home buyers to finance 96.5% of acquisition costs PLUS the cost to renovate the home.  So, if you’re interested in buying a foreclosed property that has had the carpets removed, that doesn’t have a front door, or needs some nice fixing up, than this loan will enable you to do so.  And the escrow can close before any of the work starts!

Writing An Offer

You definitely want to write your offer to include the verbage, “seller is aware that buyer is obtaining an FHA 203(k) loan.”  This is important, as the seller, and Listing Agent, need to know that you understand that the property needs some rehabilitation attention, if it’s not included, than the seller may not take your offer seriously; as they know the property is dilapidated.

FHA’s 203(k) Loan Attention To Detail

You’ll definitely will want to get your ducks in a row, on this loan.  It’s not only important for you to have your documentation ready, but you’ll be working with a general contractor that needs to pay specific attention to details, as well.  One example is a general contractor’s insurance needs to be updated…almost always.  The renovation must start within 2 weeks of the escrow closing.  All of the work must be completed within six months.  So, if the general contractor’s insurance is set to expire in seven months, from your loan application date, you can see that this could be an issue.  Simple answers to these types of dilemmas, are exactly why you want to use a knowledgeable Mortgage Banker, like Access Real Estate Lending.

You Will Want To Be Very Organized

What You’ll Need

Click on this link, and it will take you to a list of everything you’ll need to gather, including what your general contractor will need to provide.

Real Estate Today Radio – December 10, 2010

 

 

Check out Danny Salas and Dan Henry (Steve Williams Realtor) on Real Estate Today Radio! 

Check out Danny Salas and Dan Henry (Steve Williams Realtor) on Real Estate Today Radio and hear why they both agree that it is best to act now instead of waiting for the market to bottom out.

 

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Real Estate Today RADIO – December 1

 
 
 

Check out Danny Salas on Real Estate Today RADIO, December 1, 2010 speaking about upcoming Fannie Mae changes.

Valuable for Homebuyers AND Real Estate Agents!

 

 

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Unpermitted Room Additions, Garage or Porch Conversions

Conforming & FHA Allowed

In the past, if you had an unpermitted addition on your property we would have to remove the unpermitted area from the GLA (gross living area) square footage and also price the loan on a Standard 30 Year Fixed Rate Loan, or a government sponsored FHA Loan, with a significant additional cost.  Well, now, Access Real Estate Lending, through one of our wholesale partners, is able to leave the square footage in the GLA and also keep our best interest rate pricing!!

 Single Family Properties with unpermitted room additions are acceptable as described below.

All of the following must apply:

• The appraiser must comment that the addition or conversion was completed in a workmanlike manner and that there is not any impairment to the soundness, structural integrity or livability of the property.
• The room addition must conform to the rest of the property.
• The addition or garage conversion cannot cause the subject property to be in violation of zoning.  The appraisal must indicate that the zoning is legal and may not include any comments that the zoning of the property has been jeopardized. 

• The square footage of the addition may be included in the appraised value.  A garage or porch conversion may be appraised as originally intended or as currently used, depending on the comparable sales.  Example:  If garage conversions are typical for the area as evidenced by comps, the conversion may be appraised as it is currently used.  If garage conversions are not typical for the area the conversion should be appraised as a garage.
• The hazard insurance policy must clearly show that the entire square footage of the subject property, including the unpermitted addition, is included in the policy. 

Examples

Room Addition Example:  If the property was a 3 bedroom property and another bedroom has been added and the property is being appraised as a 4 bedroom property, the hazard insurance policy must clearly insure the total square footage of all living space, including the addition.

Garage Conversion Examples:  If the property is being appraised with the garage conversion being valued as a bedroom, the hazard insurance policy must clearly insure the total square footage of all living space. 

If the garage conversion is being valued as a garage, then the hazard insurance policy need only insure the area as a garage.

NOTE:  The hazard insurance policy does not need to indicate that there is an unpermitted addition or garage conversion, but the square footage that we are lending on must be covered by the policy.

 NOTES FOR GARAGE CONVERSIONS: 

Zoning:  Local ordinances and/or municipality requirements may obligate a property to have covered garage storage.  This is more common in PUDs and gated communities.  It is the responsibility of the appraiser to check for this type of requirement; however, it is the underwriter’s responsibility to thoroughly review the appraisal to ensure the property’s zoning is compliant. 

 Ineligible Scenarios

The following scenarios are not eligible under any circumstance:

• Room additions are not eligible on 2-4 unit properties.  All properties must be single family properties and the addition may not result in the property converting to a multi-unit property, etc.
• Additions that result in extra living units, also known as accessory units or granny flats, etc. are not eligible.   

Related Must Reads

FHA-Why It’s King

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