Yesterday we had a great time in San Jose with Rob Gilroy, his boss Ricky, the entire crew from Bank of America as well as Megan Davis from B of A in Campbell. There were quite a few agents in attendance and they were getting it down as the questions from the audience were a good indication of their interest and level of understanding of the program.
It is always a pleasure speaking to a group who actually "gets it" as the FHA 203k loan program is a powerful tool While it isn't the only one out there it is clearly the most widely used program for purchase or refinance and renovation all in one low interest loan.
We had a friend in the mortgage lending business about a year ago that was having difficulty selling the product. When he told my why we found that he was letting the borrower compare his rates to a standard FHA loan which wouldn't work on a home needing major renovation.
When you are selling the FHA 203k loan to your client please compare apples with apples. What are your choices? If you can purchase the home without doing the work you are likely an all cash buyer. Then you need construction money... which is expensive. as you pay points and fees to get a high interest loan which is typically 10-12% interest and it has to be paid off in 6-12 months by taking another loan to clean up the construction loan. There is no comparison to the 5%+/- 30-year loans we are talking about.
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