“A 203k loan takes too long and is too hard to get closed.”
If only I had a dollar for every time I have heard that statement, I would be rich. According to the National Association of Realtors 31 percent of all April home sales were made with cash. How long do you think that will last? Foreclosures alone make up more than one million listings. Add in the average home turnover rate and you have a tremendous amount of housing stock for sale in this country. Many listings are either in non-compliance or in deep need of renovation due to deferred maintenance from years of neglect. The 203k loan is one of this country’s primary financing vehicles to address these properties, yet we listen to a handful of agents, lenders and contractors who continue to dismiss the 203k program when many of them have never even used it.
It’s all about education
OK, I am going to tell you a mortgage trade secret, so pay heed: The FHA 203k loan is not rocket science.
Education is the key to success. Educating Realtors, home contractors, inspectors and homebuyers will be vital to the effort to increase 203k volume in the months and years to come. Social media outlets — Twitter, LinkedIn, Facebook, and other websites — are still virtually untapped resources for educating the public and potential 203k borrowers about the benefits of the FHA 203k program. Over the past eight months, I have gathered more than 12,000 followers on Twitter. That number still staggers me. Many are non–real estate professionals, but I estimate that more than 6,000 are in the real estate industry and are interested in learning more about the FHA 203k program.
Furthermore, lenders must do a better job of educating their employees about the program. There is a lot of 203k loan volume out there for lenders who decide to enter the program or to expand their presence in it. Lenders must take the time to educate management and their staff about the program and then commit to spending the additional time and energy required to close deals in a timely manner. At BNC, you can ask any loan officer in our Overland Park office for information; even those who don’t work the program can explain the basics.
Loan officers get involved
One commitment that I make to all of my Kansas City 203k customers is that I will attend the site visit with the 203k consultant. If your lender is not willing to get out of the office and see your project firsthand, then how can he assist you in reviewing your contractor bids and work with the FHA 203k consultant to finalize the work write-up? Being on-site also allows me to educate the borrower, agent and contractors about the process and how we will move forward. When I select a 203k consultant on one of my national loans, I ensure that the consultant is willing to take lots of pictures for me so I can speak to the borrower about a specific repair with a clear understanding of the issue.
If someone has told you that a 203k mortgage is just too difficult to obtain, then call me and I will tell you a hundred stories of good loans made to borrowers who now live in homes that meet their standards. Many others will tell you how they gained valuable equity by taking the time to work the 203k program.
Call me at 1-800-689-6001 or email me: info@203kkc.com with your questions.
