1.Q: What is the difference between the streamline 203k and the regular 203k?
a: The streamline 203k has a cap of $35,000 including fees, with no minimum repair cost. It is designed as a â€œrefurbish and rehabâ€ loan for borrowers to finance non-structural and cosmetic repairs only. The full 203k may be used for structural repairs and room additions as well.
1.Q: Can the $35,000 cap on repairs be exceeded by soft costs?
a: No â€“ the streamline 203k caps at $35,000 including all costs.
1.Q: Define soft costs?
a: Soft costs are the closing costs associated with the 203k loan â€“ they include up to 2 inspection fees (approx $150/each), and appraisers compliance inspection report (approx $125) a supplemental origination fee (the greater of $350 or 1.5% of the rehab costs, and a contingency reserve of 10% â€“ to be determined by the Underwriter).
1.Q: Can the borrower bring in cash for repairs that exceed the maximum $35,000 cap?
a: No â€“ if the rehab amount exceeds $35,000 including costs, the loan is not eligible for the streamline 203k â€“ the borrower may not bring in funds that exceed
1.Q: What are the down payment requirements on the streamline 203k?
a: Standard FHA â€“ Maximum LTV is 96.5% for purchases and 97.75% for Rate & Term Refinances
1.Q: How do you calculate the loan amount on the streamline 203k for purchases and refinances?
a: Purchases- Use the lesser of the â€œAs-Isâ€ value provided by the appraiser, or the sales price of the property â€“ add the cost of the rehab and soft costs â€“ deduct any seller concessions that exceed 6% â€“ compare this to the â€œAs-Improvedâ€ value per the appraisal x 110%. The maximum loan amount will be based on the lesser of the 2 calculations. Apply the standard FHA LTV calculation of 96.5%.
a: Refinances â€“ Use the lesser of the â€œAs-Isâ€ value provided by the appraiser, or the current Mortgage balance â€“ add the cost of the rehab, soft costs and allowable borrower closing costs â€“ compare this to the â€œAs-Improvedâ€ value per the appraisal x 110% The maximum loan amount will be based on the lesser of the 2 calculations. Apply the standard FHA LTV calculation of 97.75%.
1.Q: Can the borrower receive any cash out on this program?
a: No â€“ the streamline 203k loan is for Purchase and Rate & Term
1.Q: Can the borrower be reimbursed for any funds spent prior to closing the loan?
a: No â€“
1.Q: What types of properties qualify under this program?
a: SFRâ€™s, condos, PUDâ€™s and 2-4 units.
1.Q: Is this allowed for new construction properties?
a: No the property must be existing at least 1 year old to be eligible for the streamline 203k.
1.Q: Is there any additional Underwriting time required for this program?
a: Normal Underwriting turn times plus 72 hours additional for a 2nd level review of the 203k paperwork will be required.
1.Q: Can this loan be used with the FHA high balance loan?
1.Q: Can this program be used with Down payment assistance programs?
a: Yes â€“ but the DAP must be prior approved by Plaza and their investor
1.Q: Can this loan be used for someone with a non occupying co borrower?
a: Yes â€“ the credit piece of this loan is the same as an FHA 203b â€“ standard FHA qualifying.
1.Q. Can this program be used for investors?
a: No â€“ this is an owner occupied only program. Not allowed for investment properties or 2nd homes.
1.Q: Can an Energy Efficient Mortgage (EEM) be used in conjunction with the streamline 203k program?
a: Yes the EEM may be used in addition to the $35,000 streamline 203k, the borrowers may finance up to $8000 in approved EEM items (Energy Star appliances, dual pane windows, insulation, etc) on top of the $35,000 allowed for the streamline 203k â€“ for a total of $43,000.
17. Q: Can this loan be used in conjunction with the HUD REO program?
a: Yes â€“ but the use of the streamline 203k must be pre-approved by HUD to be used with their REO program.
Whatever your plans are, do not try to â€œwork aroundâ€ the rules. That is the most common question I get when something like this comes up, â€œHow do I work around it?â€ You donâ€™t.
The SAR procedures that become mandatory for all mortgage lenders next week have already been implemented by most lenders, donâ€™t get caught up in that mess, good luck,
NMLS # 6395
Financing Kentucky One Home at a Time