Attend our FREE How To Find Down Payment & Closing Costs Assistance Workshop.  This class will save you money, time, and worry even if you've never owned a home before.

Topics will include:

    Top 10 things homebuyers want to know and should know about buying a home using government money.
    Don't waste your time and money with expensive financing.
    How to turn a foreclosed home into a dream home in the next 90 days using government grants.
    Homebuyer mistakes you can't afford to make.
    How to find downpayment and closing costs assistance.
    The secrets of navigating the often complicated homebuying  process.
    Reasons why you need more than a home inspection.
    How to qualify for CDA, My Home, and FHA 203k Renovation loan programs.

You’ll leave this free seminar with a clear vision of how the process comes together, as well as a free Home Buyers’ Handbook for easy reference.

Here’s what some of our Buyer Workshop graduates had to say about their experience:

"I found your seminar really worthwhile attending.  What struck me most was that when I asked a question, I got an honest response, and when the facilitators didn't know the answer, they knew where to look up the information and get back to us about it.   One of the great aspects was that there was an attorney present to give answers "from a legal point of view".  Lastly, the handouts were clear and concise--really helpful and not something to put away in a binder forever and always.  I would recommend this seminar to anyone who is planning to purchase a home and is new to the world of real-estate."

Tamika and James Wright

Fort Washington, MD

Down Payment Asssitance Workshop

How To Find, Buy & Fix-Up A Foreclosed Home
Notes:
203k Rehabilitation Loan Purchase Process
10 Questions buyers always ask
1.	What’s the best loan to use for a rehab loan
a.	Typically you’ll need 3 loans to complete this type of transaction. The first to purchase the home, additional financing to fix it up or rehabilitate it, and lastly get permanent financing when  the work is completed to pay of the first two loans.  The 1st 2 loans, called the acquisition and construction loans have relatively high rates and low loan periods (like 24-48 mths)
b.	The 203k loan was designed to address this situation.  You can just get one loan and finance the acquisition and the rehabilitation.  The most inexpensive and easy to use loan product to do a rehab loan is called an FHA 203k loans…  the funds you’ll receive are based on the value of the property after the work is completed
c.	3.5 percent vs 10% down for a conventional loan
d.	Although no one is stopping you from renting or selling in 1 year
i.	You do have to be an owner occupant

2.	How can I tell if 203 (k) home loan is right for me
a.	To qualify
i.	3.5 % down
1.	Can be gifted from a close friend or family member
2.	Can borrow the funds from your retirement account without the new debt counting against your ratios
ii.	640 median credit score
iii.	Allows co-borrower who don’t necessarily need to live in the home
b.	There’s no minimum for streamlined 203k
c.	There’s a $5,000 for a full 2003k
d.	You can use a 203k loan for a home that is a one to four family dwelling.  
e.	Condo is ok but (there are restrictions, like the condo/subdivision must be a hud approved)
f.	Single family or townhome ok
g.	Multifamily is ok
i.	You can even convert a one family dwelling to two, three or four family.  You can also decrease from a four family to 1 or 2 family.
h.	The mortgage for the home cannot go over the FHA loan limits
i.	Click here to see loan limits.
i.	You cannot use to finish a home that currently under construction.

3.	What can be included in the rehab when using a 203 k loan? (not limited to this list)
a.	Repair and replacement of structural damage
b.	Add a bathroom
c.	Add an addition
d.	Finish bathrooms
e.	Remodel kitchens and bathrooms
f.	Change siding 
g.	Eliminate obsolescence like a carport or covered porch
h.	Replace plumbing, heating and electrical systems
i.	You can even install new plumbing fixtures of interior whirlpool bathtubs
j.	You can install a new sewer or septic systems
k.	Roofing, gutters downspouts
l.	Flooring of all types and carpeting
m.	Energy conservation improvements like double pain windows, insulations doors, solar systems caulking and weather-stripping
n.	Landscaping, patio and decks, fences driveway walk
o.	Trees can be removed if they are a safety hazard.
p.	new appliances and paint and also swimming pool repair
q.	Improvements for accessibility to a disabled person

4.	What things cannot be included in a 203k rehabilitation?  Not limited to this list repair of:
a.	Barbeque pit
b.	Bathhouse
c.	Exterior hot tub, sauna, spa or whirlpool bath
d.	Outdoor fireplace
e.	Installation on new swimming pool
f.	Gazebo
g.	TV antenna
h.	Satellite dish
i.	Tennis court
j.	Trees cannot be removed unless the tree is a safety hazard

5.	How do I choose a contractor? What Questions should you ask?
a.	Seek referrals – Who have you done work for in the past. 
i.	List of references - The contractor should be able to give you the names, addresses, and phone numbers of at least three clients who have projects similar to yours.	  The lender will also ask for references and has paperwork for the contractor to complete.  You may want to ask the following?
1.	Can I visit your home to see the completed job?
2.	Were you satisfied with the project? Was it completed on time?
3.	Did the contractor keep you informed about the status of the project and any problems along the way?
4.	Were there unexpected costs? If so, what were they?
5.	Did workers show up on time? Did they clean up after finishing the job?
6.	Would you recommend the contractor?
7.	Would you use the contractor again?
b.	Verify that they are licensed and insured
i.	Maryland Home Improvement Commission Contractor’s License
ii.	Confirm General liability insurance.  Contractors without insurance could mean they are unlicensed.
iii.	Home Improvement Commission at: 410-230-6309 or www.dllr.state.md.us
c.	Get multiple bids
d.	Contractor must have the ability to start work upfront
e.	Contractor most be accurate because the mortgage cannot be increased to cover the cost of the rehabilitation.
f.	Can I do the work?
i.	Must be qualified… the lender agrees on a case by case basis
ii.	Must perform a work right up and that make take time because of lack of experience.  Also the amount of the mortgage cannot be increased to cover additional expenses
iii.	Borrower will only be paid for the cost of materials.
g.	Check lenders exception list

6.	What is the 203(k) home  buying process (Part 1 and Part 2)
a.	Homebuyers locates to property
b.	Market Analysis with realtor
i.	Extent of the rehab work required
ii.	Rough cost estimate of the work
iii.	Expected market value of the property after the completion of the work
iv.	You could lose money for the appraisal ($400) if the value of the property is less than the purchase price plus the cost of improvements
c.	Sales contract is executed
i.	Add contingencies to protect deposit
ii.	Home inspection
iii.	Financing
iv.	Appraisal
v.	Negotiate closing cost help/get grant money
d.	Home & Termite Inspection
i.	Home inspection usually costs 250-450
ii.	Consult with agent about required FHA repairs…
iii.	If the property work is going to more than $30,000 we can save money by having the HUD consultant do the inspection
e.	Work write up
i.	Contractor <$30,000 (HUD Consultant not needed)
ii.	HUD Consultant >$30,000 
1.	Send to contractor >>> for estimate
f.	Appraiser performs the appraisal
i.	This is the most important part of the process and has the biggest impact on your timeframe.  The appraisal cannot be ordered until there is a work write up for a regular 203k or contractor bids for a streamline 203k. Typically, closing does not take place until 45 days after the appraisal is ordered.
g.	Lender prepares the loan package
i.	Application is reviewed and all financial information is verified to establish the ability of borrower to repay the mortgage
ii.	Establish maximum insurable mortgage amount (based on appraisal and write up)
iii.	Lender Issue Commitment
h.	Mortgage Loan closing
i.	Rehabilitation Escrow Account is established
i.	Rehabilitation Construction begins
i.	Homeowner had 6 months to complete work
ii.	During construction process funds are release after the work is inspected by a HUD – approved inspector.
j.	Completion of Work/Final Inspection
i.	If there is unused contingency reserved funds or mortgage payment reserves in the account, the lender must apply the funds to prepay the mortgage principal

7.	What improvements will make my home go up in value
a.	Home values are based on what your neighbors have sold their homes for
b.	 Simple maintenance, landscaping, and fresh paint 
c.	Read -  101 Ways To Massively Increase The Value Of Your Real Estate Without Spending Much Money by Dolf de Roos 

8.	How can I get the money to reduce my closing costs/ and or down payment requirement
a.	Negotiate closing assistance with seller
i.	Seller help is capped at 6% of sales prices
b.	Homebuyer grants
c.	HUD $100 Down program if you buy a HUD home
d.	Fannie Mae 3.5% closing assistance if you buy a Fannie Mae foreclosure

9.	10  things you must know about a 203 (k) rehabilitation loan
1.	What’s the minimum & Maximum requirements
a.	No minimum unless you are using a full 203k then $5,000 worth of eligible improvements
b.	The cost of improvements and purchase price cannot exceed the HUD approved FHA loan limit of $729,900  dc, pg, mg
2.	Can we refinance a 203k into
a.	yes
3.	Can we include mortgage payments
a.	Yes. Up to 6 months worth
4.	What if they find more things that need work while the contractors are rehabbing
a.	Establish a contingency reserve usually between 10 and 20% of the cost of rehabilitation
5.	Money to start work at the table/ When will we get money?
a.	Depending on the lender at the table or up to a month after settlement.  
b.	Streamlined half up front and half at completion
c.	Full 203(k) up to 5 scheduled draws
6.	When can I sell or rent the home?
7.	How long does the whole process take?
a.	Finding a home can take 3 months
b.	The closing process can take between 45-60 days
c.	Rehab work can take between 30-120 days depending on the scope of the work and the ability of the contractor
8.	What happens if the cost of the rehabilitation increases during the rehabilitation?
a.	The mortgage cannot be increased during to cover expenses
9.	Can a detached garage be placed on the property?
a.	Yes. However the new unit must be attached on the dwelling
10.	Can cost savings on the rehabilitation be given back to the borrower
a.	If cost savings are not used money is applied to mortgage principal or
b.	You can make additional improvements and a Change Order must be completed and approved by the lender.

Sales Price + repair cost must be 110% of the appraised 
Example:
100,000  Sales Price
15,000 In repairs
---------------------------
115,000 sale price + repairs
110,000 appraised value
110,000 x 110 = 121,000
We are ok 

Example
100,000
25,0000 in repairs
----------------------
125,000 sales price + repairs
110,000 appraised value
110,000 x 110,000  = 121,000
We over by $4,000 ( buyer can come up with extra 4,000 or back it down)
Doesn’t happen much! 


MarcusBruno