203K interest rates...Mortgage Insurance...etc (PMI, loan officer, premium, approved)

[bettyklang]

Hello...

I've been reading about the 203K's on the HUD site, because im considering 203K loan (borrowing 10K max)

I was under the impression, from reading on that site that the loans are lower in interest than conventional loans because they are insured by the Govt. But thus far, calling various banks and mortgage brokers i've been finding them MORE expensive. Does anyone know anything more about this?


Also, I'm a bit confused regarding the PMI/MI...the 1.5% i pay at closing of loan... will i be paying additional PMI/MI premiums on top of that? Would I be pre-paying the following year as well?

Thanks in advance...

[renriq02]

The rates may vary per day compared to regular conventional loans.

The upfront MIP factor has changed recently, and you might want to make sure that you're still going to be paying 1.5% upfront, and the monthly fee of 0.5%. The monthly fee can go up to .55%, and the MIP range is 1.25-2.25%

Originally Posted by bettyklang

Hello...

I've been reading about the 203K's on the HUD site, because im considering 203K loan (borrowing 10K max)

I was under the impression, from reading on that site that the loans are lower in interest than conventional loans because they are insured by the Govt. But thus far, calling various banks and mortgage brokers i've been finding them MORE expensive. Does anyone know anything more about this?


Also, I'm a bit confused regarding the PMI/MI...the 1.5% i pay at closing of loan... will i be paying additional PMI/MI premiums on top of that? Would I be pre-paying the following year as well?

Thanks in advance...

[bettyklang]

thanks for your reply...oh i kjnow rates vary daily...but, i've been under the impression they are same or less than the daily rate, instead when i first started looking the loan officer at one of the banks told me it's actually .25% higher than a conventional loan. HUD site says its lower than a conventional loan...

[renriq02]

It varies...

In the last 3-4 months FHA was lower...
In the recent weeks it has been higher...

Originally Posted by bettyklang

thanks for your reply...oh i kjnow rates vary daily...but, i've been under the impression they are same or less than the daily rate, instead when i first started looking the loan officer at one of the banks told me it's actually .25% higher than a conventional loan. HUD site says its lower than a conventional loan...

[bettyklang]

hmm..im in los angeles and i've been looking since february, and the 203K interest has never been lower. Odd...

[rcarrillo]

Well the "standard" FHA loan program, 203b is typically lower than conventional loans.
The "rehab" FHA loan program, 203k is often a little higher than the 203b program (why the b and k, don't ask me).

Many lenders won't even do the 203k program. The main reason is that I have seen stats that ~30% of them end up in litigation. Either the contractor did not do adequate repairs, they estimates were too low, the work did not get done, etc.... then the home owner tries to drag the lender into the issue or stops makign payments. That makes the loan riskier than a "standard" loan, therefore the increased interest rates.

[Tyrone Heller]

If you are interested in an FHA203K in the Los Angeles area, I do them. The advantages of a 203K for a rehab project are substantially better then any other alternative at this time, especially a full rehab (over $35,000). The greatest challenge to qualifying is that you (or a family member) must have enough documented income, Rates are NOT an issue for such a project for several reasons.

[VoyagerMan]

Is this the loan that has to be paid back in 6 months?

[Roger Watland]

Originally Posted by VoyagerMan

Is this the loan that has to be paid back in 6 months?

No. The work has to be completed within 6 months of closing. Perhaps that is what you are remembering.

Many investors require the work to be done within 3 months of closing for an FHA Streamline. HUD allows 6 months, but investors can have more stringent standards.

Three months is generally not a problem for the typical work repaired under 203K Streamline. I guess it could be a problem if it was outside work in Minnesota and the closing was in December

I originate 203K streamline renovation loans in MN, so I have to be thinking about such timing issues.

[VivaLaEvie]

Originally Posted by Roger Watland

No. The work has to be completed within 6 months of closing. Perhaps that is what you are remembering.

Many investors require the work to be done within 3 months of closing for an FHA Streamline. HUD allows 6 months, but investors can have more stringent standards.

Three months is generally not a problem for the typical work repaired under 203K Streamline. I guess it could be a problem if it was outside work in Minnesota and the closing was in December

I originate 203K streamline renovation loans in MN, so I have to be thinking about such timing issues.

Does it take longer to get the 203k streamline approved than a typical mortgage? How long does it take?