All Forum Posts by: Jeff Onofrio

@Benjamin Shaw @Chris Mason

Homestyle would not work as FannieMae requries the home to be "substantially complete"- I have been on calls with the FannieMae underwriting department and my FannieMae rep.  This term is somewhat subjective but typically this means they want to see the home has walls up, outside finished, etc.  

You really need a construction loan.  A local bank who knows the market would probably be best.  TD Bank is tough to deal with but they have a decent construction loan and that might be  a fit. 

Hope this helps! 

@Tom Chen- that is most likely the case.  Homestyle loans if done correctly with an experienced lender should take no more than 45 days to close assuming you the client are engaged.  

@Cory Newton  - FannieMae rules allow for a 15% down payment on Homestyle, lender overlays may limit you to 20%.  Its important to understand though while Homestyle may allow for investors its really for the buy and hold investor not the flipper.  As a lender if you flip that property before the lender has hit 180 days from either investor or agency purchase of the loan the lender has to pay back any premiums it has made.  As a lender we are not in the business of doing loans for free and you could be hurting that company/loan officer- who really is part of your team or should be.    So what I always tell my clients as a rule of thumb they need to not flip the house for about 8 months- this isn't always attractive to a flipper as you want to be in and out but you have to understand the ramifications of doing it sooner to the lender and your loan officer.  I hope that makes sense.  Feel free to ask any questions and I will do my best to get back to you guys.    

@Lamont B.

@Brandon Richards - looks like you are combining two products and you are talking about Homestyle as well- however there is no limit to the amount of work expect you cannot exceed 50% of the "after improved value".  

The 203k is not a horrible solution at all.  The issue lies within the professionals that you choose to work with.  Most lenders do not specialize in renovation and thus it is not handled as a specialty.  

I try to post on here when i have time to help answer questions so that you guys can get the right info and not the BS you can get from some lenders and stuff you read on the internet.  I cannot tell you how many times I have corrected misinformation.  

Good luck with your purchase Nino! 

hi Marq- 

I run the renovation division of AnnieMac Home Mortgage in Mt.Laurel and do 203k's in Philly all the time.  The property sounds doable but as James mentioned there are limits based upon the amount of stories for the commercial space. Also the reno budget is not allowed to be used to renovate the commercial space- only the residential piece.  There are ways to work around this.  I could write a book on this but send me a PM and we can schedule a call for me to give you all the details you need to make an informed choice if the 203k is the right product for you.  

Good luck and always glad to help! 

I also have consultants who can help as well! 

hi Tim- 

I have a really good loan officer in Houston who can help you.  She works with my company.  Jen Barbera from Annie Mac. Send me a private message and I will give you her info.  

Glad to help! 

@Michael Dunn

Mike- I wanted to get you a professional response from an actual appraiser so I asked my appraisal department head of my company to write you up something to your issue.  Here was his response and good luck! 

Hello Michael,

I am a real estate appraiser and I direct the Collateral Valuation department for a lender. I may be able to shed some light on the property and appraisal issues that you are facing.

The 203k renovation loan gives you great flexibility for financing the property. The scope of your repairs can clear up any potential issues.

If the property is truly a two unit property, the appraiser will be required to use the multi-family (1025) appraisal form and include sales of multi-unit properties as comparables. HUD and the lender will require 3 closed sales of multi-family properties in the past 12 months. If the area is rural, this may result in using comparables from many miles away. In very extremely rare instances, there may be no such sales to use in comparable areas and the property valuation would not meet HUD standards.

The beauty of the 203k is that you can make that home what you want it to be as long as it is economically feasible. It sounds as if you may be able to include in the scope of work renovations to have the property conform to a single family use or a single family with accessory unit use. A single family with accessory unit appraisal is reported on the single family (1004) appraisal form. An accessory unit defined by FHA/HUD is a separate additional living unit, including separate kitchen, sleeping, and bathroom facilities, attached or detached from the primary residential unit, on a single family lot. The accessory unit must be subordinate in size and appearance to the primary unit and must be connected to the utilities (except phone and cable) of the primary unit. I don't know the particulars of your property but you may just need to have the scope of work include removing the additional electrical meter.

HUD requirements include working windows on bedrooms but do not have any requirements for closets unless the municipal code requires closets.

As stated by some posters, prior to having your 203k appraisal done, you must establish a detailed scope of work. The lender can pick the appraiser, and a good lender will pick the 203k appraiser because outsourcing this function to an appraiser without renovation appraisal experience may be setting the process up for failure. After all, the lender is soley responsible for selecting an appraiser with the necessary competency for the assignment.

I purchased my current home using a 203k loan and am very happy that I did. Do not let your frustrations to date stop you from pursuing this opportunity.

Wes Costello
Collateral Valuation Director
NMLS# 1014781
700 East Gate Drive, Suite 400
Mount Laurel, NJ 08054
www.annie-mac.com 

the other issue is that the banker probably doesn't offer the FHA 203k. Not all lenders and even fewer banks do. The 203k is a great option if you are going to be living there and while what @Travis Sperr said is true about the loan amount it sounds more like the banker just doesn't have the product in his arsenal.  Typically where the cut off to a bank wanting to do a loan is $50K and under- becuase the loans have higher fees they hit high cost test quickly!  

Hope this helps.   

@Mason V.

A home can be in any shape to use a 203k.  I have used them on homes that all that was left was a foundation.   The important part is that the property had a CO (if required) or was lived in at some point in time- was this house? 

  I have done a 203k on a farm house that wasn't occupied since the 1970's- so you can imagine the shape that was in but once the house was done we had put up a 3300 sq ft house- it was amazing.  

Feel free top post more info and I will be happy to help! 

@Ryan Koehler

I am partial because of what I do but I will tell you that if I was in your shoes I would get a job in a field that excites you. I would then look to buy a 3-4 unit property - your area of West Chester is great but so are many surrounding areas, as I am sure you know. I am from South Jersey and know your area well. I would recommend using a FHA 203k loan to utilize as little amount of money as possible but get yourself a property where you can build some instant equity (to be used later as leverage for your next deal). This way you are building equity via the work being done and purchasing the property correctly plus you have 2 to 3 other people paying your mortgage plus making you cash each month. I have had this same conversation a bunch of times with friends, family members, etc...had I known what I know today as I sit here at 38 I would be willing to say that I would be sitting with a lot more in the bank and a portfolio of properties (not that I am doing bad by any means but...).

The FHA 203k is the vehicle to make it happen- low down payment and qualifying isnt hard but you need the right team.

You are in a great position and you need to strike while the iron is hot!  Good luck and if I can be a help feel free to reach out.