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Remove the But

Written by Posted On Tuesday, 13 June 2017 09:51
Our compass always leads us to the solution! Our compass always leads us to the solution!

“I absolutely LOVE this house, but I just can’t afford the place knowing I’ll have to replace the (insert home improvement need here)." 

            I want to talk about FHA 203k loans and the gross misconception about what they are and how they work. Truth be told, in my 20-year career I’ve had very little experience with them because of these misconceptions. It just seems to be universally understood that these products are a major pain point to everyone involved and more hassle then they’re worth. However, my contrarian mind has thankfully led me to explore this mentality of the majority, and to once again find the consensus false. So, let’s remove the but by demystifying the misunderstood.  

What is an FHA 203k loan? In short, it allows for the same down payment flexibility as a standard FHA loan of only 3.5%, but to sweeten the pot, provides the buyer additional financing for home improvements like a new A/C, appliance package, roof repairs, landscaping etc. after closing. When used properly, the 203k loan opens up a completely new avenue of business for our real estate partners on both the selling and listing side.

Consider this scenario: you are taking a buyer shopping for a new home, and the buyer is somewhat limited in their downpayment so they’re leaning towards purchasing a “turnkey” property with an FHA mortgage. At face value, this is a very reasonable way of thinking for managing their financial circumstances and accomplishing their homeownership goals. But what if this limited range of properties means settling on a home they like instead of one they love? This is the beginning of the next chapter of their life, should they really be settling on such a major investment? As an agent, you can now expand on the menu of homes that fit your client’s budget emotionally and financially. “Ugh! I love this place honey, but I just wish the kitchen counters weren’t so dated! I’m sorry xyz agent, what else can you show us?"

Remove the but.

As a rule of thumb for 203k loans, the monthly mortgage payment will increase $50 for every $10,000 added to the loan amount for repairs. If we look at it from that standpoint, can we really justify not helping our clients buy a home they love when it can be financially sensible to do so? What about the listing agent? How much more value can you bring to your clients by helping sales agents or potential buyers see how affordable it can be to remodel one of your properties to their liking?

The FHA 203k program is one that has for a long time earned a poor reputation for being overcomplicated, expensive and taking too much time to close. In response, many lenders are building out entire teams for servicing these products as they find themselves more popular in today’s real estate environment. Understanding how various mortgage products can help agents move inventory can be the key for taking their business to the next level – we should take care to partner with those we can lean on to be that type of resource, it can make for all the difference in getting from good to great.  

Interested in connecting with me? (three options)

  1. Do you have a real estate topic for our next blog? Send us a message at This email address is being protected from spambots. You need JavaScript enabled to view it.
  2. Want to join me for lunch? E-mail This email address is being protected from spambots. You need JavaScript enabled to view it. and let's get something on the calendar!
  3. Looking to grow your real estate business by leveraging key mortgage concepts? Join us for our Elevate conference and RSVP to This email address is being protected from spambots. You need JavaScript enabled to view it.. Our next event is October 26th, 2017 at the Marriott Courtyard in Boynton Beach!

Together in Success,

Matt Weaver

The views of this blog, “Your Morning Shot” podcast, and on this site in general are solely those of the authors, Matt Weaver (NMLS-175651) and Zack Lewis, and do not express the views or opinions of Finance of America Mortgage.

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Matt Weaver

Matt Weaver NMLS# 175651 is a tenured mortgage professional located in Boca Raton, Florida. Considered an expert in his field, Matt Has successfuly closed 10,000+ transactions over his 20-year career primarily focused on the purchase market. He is currently the Vice President of Sales for Finance of America Mortgage, the first lender ever to be endorsed by Mike Ferry, considered to be one of the Most Influential People in Real Estate by the National Association of Realtors. 

Matt has consistently sought to go above and beyond the standard practices for becoming a respected mortgage professional, and credits his consistent levels of production to thinking outside of the box. A visionary, Matt built his mortgage business on delivering the most trusted pre-approval process in the industry and investing where others cut back by building out the operational side of the business to cater to the real estate agent sales cycle. As a result, Matt is frequently ranked as one of the top 200 Loan Originators in the country according to Scotsman Guide and Mortgage Executive Magazine. This same mentality is what lead Matt to become one of the only mortgage offices in the country with a dedicated research analyst on staff, reletlessly pursuing creative new ways to provide value to the bottom line of his realtor partnerships. 

As a result of Matt's commitment to the power of homeownership and emboldened vision for ingenuity within the industry, he has been asked to commentate on news outlets the likes of CNBC and Bloomberg Radio, sitting on the board of the Affordable Housing Committee of Boca Raton, founding the Just 1 Brick Campaign partnered with Habitat for Humanity, and co-founding the Generation O Project - a non-profit organization dedicated to freely sharing the significance of homeownership and laying the ground work for cultivating the next ownership generation. 

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