HUD 223(a)(7) refinance for existing multifamily apartment and Healthcare mortgages currently insured by the FHA.
Eligible properties include multifamily apartments or healthcare facilities currently insured under Sections 221(d), 223(f), 232, 241, 242, and 220.
The 223(a)(7) program allows current borrowers with HUD/FHA insured loans to refinance to a lower interest rate and extend their mortgage term up to 12 years beyond the maturity date of their original term, not to exceed 75% of the remaining useful life.
Borrowers refinancing through this program often reduce the debt service for their apartment or healthcare facility and increase cash flow by reducing the interest rate and extending the mortgage term.
Loan proceeds can include the payoff of existing FHA-recognized indebtedness, the cost of refinancing, cost of critical and non-critical repairs (not to exceed $1,500 per unit), and deposits to reserve for replacement accounts. Minor repairs are allowed not to exceed $1,500 per unit. If the Physical Capital Needs Assessment (PCNA) report reflects required repairs over $1,500 per unit, you would not be eligible for this program
After the loan sizing, the processing fee (approximately $2,500) along with the required third-party reports are collected at the time of engagement with the lender.
There is no appraisal is required for this program. The only 3rd party report that is required is the Physical Capital Needs Assessment (PCNA)report if one has not been completed within the last 5 years.
The borrower is responsible for the following costs. These costs are mortgageable, and the costs vary based on the size and complexity of the transaction. The lender financing and placement fees (up to 3.5% of the final loan amount, and payable from mortgage proceeds at closing). These fees include lender legal fees, recording fees, survey, title insurance, and borrower’s legal expenses.
The entire balance of the current replacement for reserve escrow account on your current loan will be transferred to the new HUD/FHA 223(a)(7) loan.
A list of items to have prepared for a free loan analysis include the audited balance sheets and operating statements for the last 3 years, year-to-date financial statements (do not need to be audited), trailing 12-month operating statements, property’s last 6 months rent rolls, or bed count and care type for healthcare, the property’s occupancy history, by quarter, for the last three years, and a copy of your most recent mortgage statement and mortgage note.