203 K 203 KStreamline Charles Dailey Loan Officer

203 K & 203 K-Streamline Charles Dailey Loan Officer, Branch Manger NMLS License Number 79048 i. Loan www. iloanhomemortgage. com charles@charlesdailey. com 651 -428 -6968

●Ideal for borrowers who: o Are interested in buying a property that needs repairs or would benefit from remodeling o Are existing homeowners that need funds to rehabilitate/remodel their property o Want to save time and money by financing the purchase or refinance with the cost of repairs o May not qualify for a conventional loan o Have low to moderate income

●Who are first-time homebuyers ●Have credit blemishes ●Have limited cash for down payment or closing costs ●Want to finance deferred maintenance or future wanted/needed changes to home

●Streamline - Up to $35, 000 in rehab costs § Includes the 203 k fees and contingency reserve ●Full - Capped only by prevailing FHA maximum mortgage amounts

●Full: ● Large & Small Dollar Projects ● Frame of Home ● Foundation of Home ● Requires HUD Consultant ● Upfront Fee for Consultant ●Streamline: ● $35, 000 or less including the fees and contingency ● Nothing with Frame ● Nothing with Foundation ● No HUD Consultant ● No Upfront Cost

●Full: ●Streamline: ● FHA loan limits ● Room Additions ● Attached Garages ● All Streamline Repairs ● Max. of $35, 000 with fees and contingency ● Electrical & Plumbing ● Furnace & A/C ● Finish Basement ● Update Kitchen/Baths ● Paint, Carpet, Floors ● Roof, Siding, Window

●Luxury improvements that do not become a permanent part of the real property: o Examples: ●No Swimming Pools ●No Hot Tubs ●No Saunas ●No Trees, Shrubs, Flowers ●Home Theatre Systems

● Borrower obtains credit approval from i. Loan ● Borrower chooses property—if purchase ● Borrower obtains bids for labor and/or materials for desired or required projects ● Property appraisal is completed, reflecting “After Improved” value ● For refinances the same appraiser may need to provide a second appraisal stating the “As Is” value—may not be required in all cases ● Complete file, with bids, is submitted to i. Loan’s investor ● Loan Closes

●Loan is purchased from i. Loan’s investor by Bank of America ●Funds are disbursed - schedule of reimbursements is dependent on program ● Streamline - Up to 50% of bids disbursed at close to pay for materials only--balance paid when all work is completed ● Full - Up to 5 draws as work completed

●Streamline - initial investor disburses initial draw of up to 50% of bids & Bank of America will pay out the balance when the project is completed ●Full - Bank of America handles all draws and withholds 10% of each draw until final draw is paid for the completed project

●Borrower and contractors must sign homeowner/contractor agreement ●Must Get the Following from Contractors: o Copy of current license o Copy of current liability insurance o Resume o W-9 o Two References—residential projects

●Bids: o Must be detailed—think sworn construction statement o On contractor’s letterhead o Initialed by borrower o Break out cost of labor and material o Usually only need one bid on Streamline o Full K—HUD Consultant may require second set of bids

●Self-help (owner improvements) is allowed on a limited basis ●Contractors must be licensed and insured ●Work on the home must begin within 30 -days of closing ●Work to be completed within 6 -months of closing

● 10 -20% contingency reserve, determined by underwriter ●Standard FHA upfront & monthly MI ●No cash out allowed ●Max. loan amount up to regional FHA limits ●Fixed 30 -year term only

● Supplemental Origination Fee o $350 or 1. 5% of repairs whichever is higher o Block 1 of GFE ● Title Update-$50 per draw o Must always disclose min. of 1 in block 4 of GFE ● Inspection Fee-$150 per draw o Must always disclose min. of 1 in block 3 of GFE ● HUD Consultant Fee—Full 203 k Only o Cost will range based on cost of project o Must disclose total cost in block 6 of GFE o https: //entp. hud. gov/idapp/html/f 17 cnsltdata. cfm § This link will allow you to look for consultants

● Standard FHA guidelines apply ● Manual UW approval ● Must Get an “Approve” on Automated UW ● 620 Credit Score ● 31/43 ---Housing/Debt Ratios ● Reserves only required on 3 -4 unit properties ● Max LTV for purchase is 96. 5% sale price and rehab costs or 110% of appraised value whichever is lower ● Max LTV for refinances is 97. 75% after improved appraisal or costs whichever is lower ● Can Have Co-Borrowers o No Other FHA Loans o (borrower and co-borrowers)

● Refinance o Two Appraisals o “As Is” Value § May use taxes § Very rare § UW Decides o “After Improved” Value § Factors in the value of improvements ● Purchase o Typically One o “After Improved” Value § Factors in the value of improvements o “As Is” Value = Sale Price o All normal FHA flipping rules apply to possible second appraisal!!!

●Allowed: ●Not Allowed: ● 1 -Year Old and Have Been Lived In ● FHA Approved Condos ● PUD’s—townhouses ● Single Family ● 2 -4 Units ● No Spot approved condos ● Homes that have never been lived in. ● Investor Owned Property ● Manufactured ● Log Homes ● Completely demolished homes including the foundation ● Condotels o Must occupy one unit ● REO properties o Restrictions apply

● Get permission to have contractor/consultant enter home as early in the process as possible o BIGGEST DELAY WE SEE! ● Purchase Price is the Price Paid o Don’t have to disclose cost of repairs ● Can Get Up To 6% Seller Concessions (pending change by FED) o Based on the sale price only--not repairs o For: closing costs & prepaids ● Please disclose that loan is a “K” FHA loan o Implies no issues with work orders for seller ● Ask for 45 -day window to close from accepted offer!!!!!

● If we have the bids, we can order appraisal ● Appraisal o Appraisal is ordered through i. Loan’s investor o Flipping rules apply to all files—UW may require two ● With P. A. and Docs, we can submit to underwriting o Appraisal can come in later ● Get Approval with Conditions ● Clear Conditions ● Close Deal

● Sale Price $150, 000. 00 ● Repairs $ 20, 000. 00 ● 10% Contingency $ 2, 000. 00 ● Final Inspection—per draw $ 150. 00 ● Title Update-per draw $ 50. 00 ● Sup. Orig. (1. 5% or $350) $ 350. 00 ● Total Cost = $172, 550. 00 ● 96. 5% LTV or 3. 5% Down - $ 6, 039. 25 ● Base Loan without MI = $166, 510. 75 ● Upfront MI @ 2. 25% + $ 3, 746. 49 ● Total Loan with Upfront MI = $170, 257. 24

● Payoffs: o First Mtg. $175, 000. 00 o Second Mtg. $ 17, 850. 00 ● Closing Costs & Prepaids $ 7, 500. 00 ● Repairs $ 16, 350. 00 ● 10% Contingency $ 1, 635. 00 ● Final Inspection—per draw $ 150. 00 ● Title Update $ 50. 00 ● Sup. Orig. /Draw Fee (1. 5% or $350) + $ 350. 00 ● Total Cost = $218, 885. 00 ● Upfront MI @ 2. 25% + $ 4, 924. 91 ● Total Loan Needed = $223, 809. 91

Charles Dailey Loan Officer, Branch Manger NMLS License Number 79048 i. Loan www. iloanhomemortgage. com charles@charlesdailey. com 651 -428 -6968