St. Louis Mortgage Help

As a real estate professional who is working with home buyers, especially first time home buyers, there is a high likelihood that you are working with distressed properties, foreclosures, REO, and Short Sales.

If you have ever had the experience of working with bank owned properties, foreclosures, REO, etc., you know that many are 'as is' properties and that means, cash, harder to qualify for Conventional mortgages, or renovation mortgages.

The KING of all the Renovation Mortgage Programs is the FHA 203k! This loan program has a low down payment requirement, easy qualification guidelines, and can turn a house with issues into a sale for you.

Writing A Purchase Offer with FHA 203k Financing

• First insure that your Pre-Approval Letter states the home buyers are FHA 203k approved. Many sellers of distressed properties will only accept conventional financing (to a limit) or a renovation mortgage. This is especially true of HUD and Homepath foreclosures.
• Place in the financing section of the sale contract FHA 203k Renovation and if your contracts have a FHA Addendum Rider please fill this out as well or request a FHA Amendatory Clause from your home buyer's Lender.
• Provide for a longer Financing Contingency period than what is the norm. Best practices are that we allow for the Home Inspection and possible negotiations, Renovation Estimates which includes a Feasibility/Work Write-Up from a HUD Consultant, General Contractor Estimates, possible architectural plans, and then the appraisal which has to have the full detailed estimates to determine value. When there are delays in the process this is where it happens nearly every time!
• Give AT LEAST 45 days to close, because of the extra processes involved and the additional 3rd party involvement I always request a minimum of 45 days and if we are comfortable with asking for more time we can do an 'on or before' 60 days. (We all want the loan to close as fast as possible)
• There is no need to put into the sales contract or offer anything more than the offered or negotiated sales price. Nothing needs to be inserted regarding the cost of renovation, at this time.

What to Expect After Acceptance

• If the utilities are not turned on they will soon need to be. Expect to providing more access to the property than normal.
• A Summit Meeting at the house soon after the Home Inspection. At the Summit Meeting the home buyer, their real estate agent, their General Contractor, and a HUD Consultant will meet to start the process of determining the final numbers for the cost of renovation. I frequently attend the Summit Meeting too!
• Expect the appraisal to have two values, 'as is' and 'after completion' also expect the appraisal to come in much later than normal. Lenders cannot order the appraisal until the cost of the renovation is known so we can pass that information on to the Appraiser.
• Expect changes, the FHA 203k loan is one of the more fluid loans in the industry. There is more going on with the FHA 203k, more 3rd party involvement, more potential for delays.
• Expect to ask a lot of questions, maybe, an experienced loan officer that specializes in renovation loans will answer many questions before they come up.

All in all the FHA 203k mortgage program are not that much more difficult from a Real Estate Professional's side, but they are a bit more to deal with. They take a little longer and have the potential for delays BUT they serve our clients very well and are very much needed to help provide a great asset to our home buyers.

The best way to keep a FHA 203k loan on track to close on time, not be a major headache, and stress provider, is to have a highly experienced Loan Officer working with you and the home buyers.