Profile picture for Rob Weber

Rob Weber

Lender

Loan Officer, Renovation Specialist (9 years experience)

Specialties:
Purchase Loan,
Refinancing,
203k, HomeStyle, HomePath Reno

Advice

  • (88 Contributions,
  • 2 Best Answers,
  • 28 Helpful)

Contributions are sorted newest to oldest.

Escrow account for repair?

Answer

Many lenders have programs like this (maybe "many" to me since I'm only interested in lenders who offer a suite of Renovation products).My company for instance has a conventional w/escrow repair up to 25k (as I write this, we just upped it from 15k).  It works just like a rehab loan except there's only one draw and the pricing is the same as a non-rehab loan with a very small fee to handle the escrow account/payout post closing.  My buddy is doing one of these right now in lieu of a 203k or HomeStyle Reno since he only needed minor things done and couldn't justify hitting his 401k or the lifetime cost of a rehab loan so this was perfect for him.  My point is, for the right borrower, a loan w/escrow repair will get you the best of both worlds if the lender does it right.

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What is the best way to incorporate rehab costs into a mortgage for an investment property?

Answer

To correct a previous poster, a HomeStyle Renovation loan can be done on:Primary Home: 1-4 unitsSecond home: 1 unitInvestment home: 1 unitMax LTV on investment is 85LTV but the MI companies won't insure the extra 5% (maybe in the future they will) so 80% is the cap.50% of the future value is a lender overlay but most lenders have that as a guideline to limit exposure.  Information may change over time, future readers should inquire if these guidelines are still correct.

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I'm looking for a rehab loan for investment properties.

Answer

Unfortunately for the loan you're looking to take with your down payment, there isn't a conventional product available, as of when I write this.  You'll need to seek a portfolio private/hard money lender to complete this purchase.As a Homepath Renovation loan, you could get away with as little as 15% down.  The HomeStyle renovation loan will do 15% down as well but at this time, I don't know of a MI company that'll insure the 5% so you'll see 80 or 75LTV with most lenders.  If someone knows which MI company will insure, I'd love to know.My suggestion is to start small with a few properties, maybe get another investor, build up some cash then use a lender for a bigger project (I'm not sure if this is a big project for you or not, I'm not sure where you live) since it'll hit your credit obtaining the loan.  That's what I usually tell my clients who want to get into rehabbing+flipping.  Build up cash reserves with small properties if they have cash and when they have enough and want to do a bigger loan, call me so their credit doesn't keep getting hit with new mortgages every few months then at that point, your main concern is what to do with all the money you're making if you're that successful flipping them.

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Should I Recast My Loan?

Answer

Just noticed my typo from before, heh. It sounds like you have what you need from your loan officer or you've figured out a strategy for yourself. A savvy loan officer who works with investors should have been able to advise you about all your options and why certain ones may make more sense the others. If they haven't done so or can't for some reason, then there may be reason to be concerned. If you need additional assistance you can find my info in my profile.

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Finding a contractor for FHA 203k loan in Florida? Impossible?!

Answer

Good ole Ocala, I just did two loans in the area, both clients were very happy with their purchase, I hope the same goes for you as well!Cassandra is correct, any contractor can be your contractor as long as they carry the appropriate licenses for the type of work they do (if any is required) and have sufficient insurance coverage in addition to completing the minimal paperwork to get approved with your lender.Lenders often don't refer a "specific" contractor due to liability reasons (and those who do, their company hasn't been sued (enough) to prohibit this practice).As for any website or contractor stating they're a "203k contractor", there's no such thing, it's a marketing gimmick by a few companies who decided to create a service around an unrecognized certification (when I say unrecognized, I'm speaking from a lender's perspective).  HOWEVER, that's not to say they haven't spent their money wisely by using one of these unofficial certifications, they probably know what to do more than most contractors as far as basic paperwork is concerned and what's required to be done in a home to meet FHA guidelines.  That being said, any competent loan officer who specializes in this type of work can tell you that off the top of their head, at least generally what's being looked for by the appraiser.80% of my clients aren't in my local area so most loans have contractors getting approved for the first time.  I can honestly say that in the last 60 loan packages I've sent out, only three contractors had to be replaced due to not having a license to do something they tried to bid out and everyone else had no issue deciding which contractor to use, how much they wanted done and were willing to pay and getting the applicable docs back in a timely manner.  Most clients doing these loans are well prepared though I can only speak from my clients experiences, many came from other lenders who had no clue so my perspective may be slightly skewed.  That being said, it's a straight forward process if you're proficient in these types of loans.

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203K

Answer

lclark022,It's generally not a good idea to post in a public forum you wish to commit loan fraud...If you wanted to do the conventional version of this loan, as a rehab loan, you'll still likely have to sign a document from your lender no other interested parties are allowed to be your contractor.  "Collusion" contributed to a great many fraudulent transactions in the last ten years, which is why any lender with their head screwed on correctly, will not allow family members (and often employer/employees of your job) to be apart of the same loan.  While I doubt "collusion" was your intent, a very in depth review of past loans by investors (Fannie/Freddie/FHA/VA/etc) have resulted in many situations where family members working with other family members on the same transaction created undesirable situations for the lender/investor.  You may have the best of intentions having a family member do the job but history has told us that family members will not charge you labor or such a low cost that should something happen to them, you couldn't get another contractor to do the job for the same price and would be out of pocket the increased labor costs and if you didn't have the cash to pay them in this rare circumstance and the work never was completed, the lender would be forced to eventually foreclose.Any lender allowing this would be opening themselves up to investor buy-backs though if you can find someone who'll do this, by all means, take advantage of them, don't walk, RUN to them, before their legal department puts the kabosh on allowing family members to be an interested party.Best of luck.

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What type of loan would work best in this situation?

Answer

I've actually had a similar project to this approved in the recent past though some details are missing for me to make a fully qualified response.  If you'd like to touch base with me on this scenario, you can find my contact info in my profile.Regarding another user's post, a 203k loan would _not_ ever be allowed on this project though it may be possible to do it with a different loan given the right circumstances.

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Conventional or FHA after foreclosure in 2011 in IL

Answer

As long as the sheriff's sale is 3 years to the day seasoned (or 3 years since the FHA claim was paid if it was a FHA loan), you can get a FHA loan, or VA loan for that matter.  As others have stated, if you qualify, you can get the Back-To-Work program.Based on your credit score of 610, your score seems a bit low after the foreclosure three years ago or you have some old items holding your score down (hopefully no late payments since then on anything).  After three years of re-established credit, usually we see scores in the mid 600's at the very least.  You should talk to a knowledgeable loan officer or credit repair company (should try the loan officer first if they have depth in this area).As for the income, as long as your debt isn't too great with your income level, you should be able to qualify without any problems, especially with a healthy 401k for reserves.If you'd like to followup with anyone, click on their profile/name for contact info, myself included.I just noticed you're local, my office is in Oakbrook if you want to schedule an appointment sometime.

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