http://midatlantic.fha203Konnect.info/

1. FHA 203K Renovation Tools for
REO Real Estate Agents
FHA 203K Made Easy, We
even do them with FICO
Scores down to 580!
Mike Tozzolo ~ (888) 295-7899 x 3370 FHA 203Konnect ~ A Distressed Home Marketing Tool for Realtors

2. Mike Tozzolo, FHA203Konnect
First Guaranty Mortgage Corp
Learn about the FHA 203K Renovation
Tool for Realtors and show Home Shoppers
how they can get in the distressed home
property game with this great Niche.
(888)-295-7899 x 3370
mtozzolo@fgmc.com
@FHA203K_Guru
Mike

3. The Hot Niche for
Realtors
FHA203Konnect
The FHA 203K Renovation Tools ~ A core marketing strategy for REO Realtors
FHA 203K an Equity Builder! On average home buyers see
about a 20% equity increase (amounts can differ and
depend solely on the buyer’s abilities) in value when
purchasing distressed homes and renovating. Great for First
Time Home Buyers. Our approach to FHA 203K Lending is an
orchestrated effort by our networked partners and a great
referral source for you!
Did you ever have the wrong house, but right
neighborhood? FHA 203K probably could of fixed that. FHA
203K can renovate a property even if all that’s left of the
original structure is the foundation.
FHA allows your Home Buyers to FINANCE the cost of the
repairs in their renovation loan. What does this mean and
how does it work?
A recent client bought a house for $87,000 that needed
$39,429 in repairs, making the total COST $126,429 and the
After Improved Value came in at $146,000. We closed our
Agent’s Listing with a base loan amount of $124,503, which
covered the cost to purchase the home and repairs. Be sure
to check out the exhibits to the right to learn more.
CRUCHING THE NUMBERS IN REAL TIME
Negotiated Sales Price $87,000
Cost of Rehab $39,429
Sub Total $126,429
After Repairs Value $146,000
Initial Inv (3.5% Down Payment/Closing Cost and Escrow $4,895
Equity Appreciation after rehabilitation $19,574
Recognized Appreciation after repairs $14,680
Mike Tozzolo X (888) 295-7899
~FHA 203Konnect ~
First Guaranty Mortgage Corporation

4. So what is an FHA 203K Loan
and why use one?
When a buyer wants to buy a home that needs repairs utilizing most
Conventional or FHA financing, normally the repairs would have to be
completed prior to the closing of escrow and the repairs would fall on the
responsibility of the existing owner. With so many foreclosures in today's
market, many times these houses in need of repair are listed "as is", which in
the past required a cash buyer and cash buyers limit you opportunity to
close your sale! Not using the FHA 203K loan as your financing tool I believe is
pure misunderstanding of the program and lenders haven’t properly
educated agents on how to use this great financing tool to close the deal.
Listed below are just a few things your client can include in their FHA 203K
Streamline and so much more can be completed when using the FHA 203K
Traditional Financing.
 Repair Replace of the Roofs, Gutters and Downspouts
 Repair Replace/Upgrade Existing HVAC Systems
 Repair Replace/Upgrade Plumbing & Electrical
 Repair Replace Flooring
 Updating Kitchens and Bathrooms
 Painting both Interior and Exterior
 Weatherization including storm window and doors, insulation, weather stripping,
etc.
 Purchase and installation of built in and freestanding appliances
 Accessibility Improvement for the physically challenged
 Lead Paint Stabilization
 Repair Replace existing/add exterior decks, patios & porches
 Basement and Attic Finishing & Remodeling
 Septic System and Well repair or replacement
If the property is in the right neighborhood, but doesn’t have the right
number of bedrooms or they need an extra bathroom the cost can be
included for these additions with the FHA 203K Standard Loan Financing
Program, as long as the market supports these additions. Another big plus is
your home buyers can include up to 6 months of house payments in their
loan, so they can continue living in at their current residence and not worry
about making a mortgage payment and rent! We’ll also including up to 15%
in contingency reserves just in case your client has some additional cost.
Once all the repairs are complete any money left over in reserves or built in
house payments will be applied to the principle to reduce the loan amount.
Mike Tozzolo (888)-295-7899 X 3370 ~ FHA 203Konnect ~ First Guaranty Mortgage Corporation

5. FHA 203K Renovation Essentials
for a Successful Closing
Step 1: Get your Client Pre-Qualified Immediately. Complete an easy Application.
Step 2: Once you have your home buyer pre-qualified we’ll reach out to you and your Home Buyer to discuss the renovation approval process.
Step 3: This step is as important as getting your home buyer pre-approved, it’s about the property. With the FHA 203K Renovation Loan the property your
home buyer selects as important a getting pre-approved. We know that Location, Location, Location is our golden rule, but these days many home
buyers are equally interested in Equity, Equity, Equity. Not giving them both can end up in a no sale. Generally, Bank Owned Properties can sell of 20 to 50
percent less that non foreclosed home in the same area and the right renovations can easily create additional equity appreciation.
When working with a Home Buyer of Distressed Homes one of the first questions they’ll have is “what’s the value I can expect to see when purchasing
these homes and the cost to renovate. You’ll need to have an in-depth discussion with your Home Buyer and with information they provide and your
experience, it shouldn’t be to difficult to come up with a projected BPO based on the homes needed repairs. Then get property inspection and
recommend your Home Buyer get at least licensed contractors to provide bids for needed repairs based on the inspection and any other items they’re
wanting to improve the property with.
This by far is the one factors that can make your closing day a pass or fail date. Many Contractors simply aren’t qualified to complete the work your Home
Buyer expects or might not be properly licensing to meet FHA requirements, I’ll review your contractor qualifications, but make sure your home buyer
covers FHA’s contractor qualifications.
FHA 203K Contractor Checklist
FHA 203K Homeowner/Contractor Agreement
FHA 20K National Consultant Roster
If you’re using and FH203K Consultant you’ll want to provide a copy of all the above mentioned documents to them for review and utilize their expertise.
FHA 230K Consultants are required for all 203K Loans, but when they are, you’ll find them to be a valuable resource for both your and the Home Buyers.
FHA 203K Consultants review your Home Buyer’s Contractors paperwork to insure it meets HUD guidelines as well as works with your Home Buyer and the
Contractors to insure all work is completed to the satisfaction of your Home Buyers and HUD.
Some items to consider when using FHA 203K financing:
 Structure you offer to include up to 6% in Seller Concessions when possible. This is very common for FHA loans, and these concessions can
significantly improve your borrower financing option, pre-paid escrow s and buyer’s closing cost.
 Ask for at least 60 days from time of acceptance to close your loan. Of course we’ll work hard to have your loan ready to close before the closing
date, but many things have to happen before closing an FHA 203K loan. Not only does your borrower have to get credit approved, the appraisal
and repair estimates must be reviewed and approved and escrow disbursement accounts have to be set up, so 60 days gives you some extra
cushion and sellers seldom turn their nose up to a 60 day contract for a distressed home.
 Advise your client NOT to purchase any materials prior to closing, otherwise the cost of these materials cannot be included in the loan.
 If bid is not accepted we can easily transfer your client’s credit documents to a new purchase agreement.
Mike Tozzolo (888) 295-7899 X 3370 ~ FHA 203Konnect ~ First Guaranty Mortgage Corporation

6. Details please......
Down payment is based on the sale price PLUS the final cost
of the repairs x 3.5% and closing costs are separate as usual.
Home Buyers are required to hire an HUD approved FHA
203k Consultant on FHA 203K Traditional Loans. They’ll work
with your Home Buyers Contractors, recommends
modification and stays a part of the renovation process from
early in the process until the final draw has been requested
to insure a successful renovation.
An FHA 203K consultants frees are between $400 and $1000,
depending on the work to be complete and can be
financed in the loan. This fee must be paid upfront, however
with proof of payment we’ll apply the upfront fee as a credit
to the down payment at closing.
Buyer should obtain estimates from several licensed
contractors. We recommend at least three estimates, but
not required. The Home Buyer.
If your Home Buyer is using an FHA 203K Consultant they’ll
determine the "required" repairs versus the "wish list of
repairs“ and discuss with your Home Buyers their options.
Your client must start with the required repairs as outlined by
this property inspector and then move to their wish list when
coming up with a renovation plan. This is an important step,
so that your client doesn’t over improve the home and
exceed the comparable properties in the area. Of course,
once your Home Buyer have provided us with all his bids,
well request an FHA 203K Appraisal be completed to insure
this doesn’t happen.
Mike Tozzolo (888)-295-7899 X 3370 ~ FHA 203Konnect ~ First Guaranty Mortgage Corporation

7. Details Continued
After closing/funding your Home Buyers can
purchase materials from the Title Company check,
they get at closing to cover the purchase of
materials and getting their renovation project
started. Of course we’ll give them reasonable
time to start and complete their renovations. As a
rule, FHA requires all renovation to begin no later
than 30 days from closing and completed within
six months.
FHA understands that renovating and daily living
don’t always go well together. Therefore, FHA
allows up to six month of Principle, Interest, Taxes
and Insurance, This allows your home buyer from
be over burden with two housing payments
renovation. Disbursements are made throughout
the following six months (maximum) and will be
withdrawn from a preset escrow account.
Once we have a clear final inspection we’ll make
the last disbursement. Now your Home Buyers
have their dream home! Simple as 1 2 3 - okay
maybe not, but that's why having an experienced
FHA 203K Renovation Lender on your side is
crucial!
Mike Tozzolo (888)-295-7899 X 3370 ~ FHA 203Konnect ~ First Guaranty Mortgage Corporation

8. FHA
203K
Eligible Property
One to Four Family Units
To be eligible, the property must be or converted to a one to
four family dwelling that will be owner occupied and has been
completed for at least one year. The number of units on the site
must be acceptable according to the provisions of local zoning
requirements. All newly constructed units must be attached to
the existing dwelling. Cooperative units are not eligible.
Homes that have been demolished, or will be razed as part of
the rehabilitation work, are eligible provided some of the existing
foundation system remains in place.
In addition to typical home rehabilitation projects, the FHA 203K
Program can be used to convert a one-family dwelling to a two,
three, or four family dwelling. An existing multi-unit dwelling could
be decreased to a one to four family unit, so keep this in mind
when being faced with selling a five or more unit property.
Existing Homes being moved on site or Modular Homes
An existing house (or modular unit) on another site can be
moved onto the mortgaged property; however, release of loan
proceeds for the existing structure on the non-mortgaged
property is not allowed until the new foundation has been
properly inspected and the dwelling has been properly placed
and secured to the new foundation.
Manufactured Homes
Yes we offer the FHA 203K on Manufactured home less than 15
years old and a minimum loan amount of $45,000. These homes
must meet the same building requirements for FHA
Manufactured Housing requirements established by FHA.
Mixed Used Properties
An FHA 203K mortgage may be originated on a "mixed use"
residential property provided: (1) The property has no greater
than 25 percent (for a one story building); 33 percent (for a three
story building); and 49 percent (for a two story building) of its
floor area used for commercial (storefront) purposes; (2) the
commercial use will not affect the health and safety of the
occupants of the residential property; and (3) the rehabilitation
funds will only be used for the residential functions of the
dwelling and areas used to access the residential part of the
property.
Mike Tozzolo (888) 295-7899 X 3370 ~ FHA 203Konnect ~ First Guaranty Mortgage Corporation

9. Eligible Properties Continued
The minimum mortgage amount cannot exceed
100% of the after improved value.
After rehabilitation is complete, the individual
buildings within the condominium must not
contain more than four units. By law, FHA 203K
loans can only be used to rehabilitate units in one-
to-four unit structures. However, this does not
mean that the condominium project, as a whole,
can only have four units or that all individual
structures must be detached.
Condominium Unit
FHA 203K mortgages can be used for individual units in Example: A project might consist of six buildings
condominium projects that have been approved by each containing four units, for a total of 24 units in
FHA, the Department of Veterans Affairs, or are the project and, thus, be eligible for an FHA 203K
acceptable to FNMA under the guidelines listed below. loan. Likewise, a project could contain a row of
more than four attached townhouses and be
eligible for an FHA 203K loan because HUD
Condominium rehabilitation is subject to the following considers each townhouse as one structure,
conditions; Occupant and qualified non-profit provided each unit is separated by a 1 1/2 hour
borrowers only; no investors; Rehabilitation is limited to firewall (from foundation up to the roof).
the interior of the unit. Mortgage proceeds are not to
be used for the rehabilitation of the exterior or other
Similar to a project with a condominium unit with a
areas which are the responsibility of the condominium
association, except for the installation in the attic of the mortgage insured under Section 234(c) of the
National Housing Act, the condominium project
unit; The lesser of five units per condominium
association, or 25% of the total number of units can be must be approved by HUD prior to the closing of
under rehabilitation at any one time; any individual mortgages on the condominium
units.
Mike Tozzolo (888) 295-7899 X 3370 ~ FHA 203Konnect ~ First Guaranty Mortgage Corporation