Oct14news08

Neat Idea from PHH Mortgage

This Idea is great for new buyers that are buying a new home that need a new baby nursery!

Here's how a builder in Arizona is capitalizing on this idea.

Here's a new idea that couldn't wait until Next Monday!

Once I heard this idea today from a colleague, I had to get it out to you to help you get some buyers! This idea is good for at least 1 new buyer for you this month and if you get me involved in closing it, I'll make sure it closes in a hurry for your business!

Sam Thompson

Senior Mortgage Advisor

PHH Mortgage

843-230-7929 or 910-489-6918

Sweat Equity - Making a Comeback!

If your buyers are ready to roll-up their sleeves, we can allow "sweat equity" to be applied to the downpayment on an FHA loan to cover up to 2% of the 3% required. The new guideline for the FHA is going to 3.5% but we have not seen this change yet so, with this idea, they'll just need to bring 1% to close!

We just need some energic buyers and creative sellers to get this going!

Call a Builder with this idea!

Before After

Use this "Sweat Equity" clause to attract those new homeowners that have energy and talent and then get them to work with a builder. Here are some ideas:

1. Complete a house under construction that needs to be painted on the inside.

2. Get your buyers to meet with a contractor to fix up an existing house that needs repairs based on the appraisal.

Promote something like "Can you paint? This house has a homeowner do-it yourself opportunity to help with most of the downpayment! Call for the details."

By taking this idea to your sellers, you are going to make them very happy too!

2% Applies to the Down Payment

FHA sweat equity guidelines.

Labor performed or materials furnished by the customer prior to closing, on the property being purchased, may be considered as a cash investment.

1. On existing construction, only the repairs listed on the appraisal or conditional commitment are eligible for sweat equity. Any work completed or materials furnished before the appraisal is made are not eligible. On proposed construction, the sales contract must indicate the tasks to be performed by the homebuyer during construction.

2. The customer's labor may be considered as the equivalent of cash if the customer can demonstrate their ability to complete the work in a satisfactory manner. The lender must document the contributory value of the labor through either the appraiser's estimate or through a cost estimating service.

3. Delayed work (on-site escrow), clean up, debris removal, and other general maintenance cannot be included as sweat equity.

4. There can be no cash back to the customer in these transactions.

5. Sweat equity on a property other than the property being purchased is unacceptable. Compensation for work performed on other properties must be in cash and be properly documented.

6. If materials are furnished by the customer, evidence of the source of funds used to purchase and the market value of the materials must be provided.

Example: The appraiser conditions for a new roof. The customer is a roofer by trade. The customer, at a cost of $500, purchases the materials. The appraiser estimates the labor cost at $500. $1,000 may be added to "assets verified for closing" if the customer can evidence the source of funds used to purchase the material.