The FHA 203K Loan Process
Have you been told a property needs a cash buyer? This product is the solution to being able to obtain it without a cash purchase! This product is the one tool available in the market place with FHA rates that can be used to finance a property in need of repair. A large percentage of the business professionals prefer to steer clear of this product due to its’ complex layers, and added timeline needed to close. However, for the savvy and experienced Real Estate broker this product can be your best friend in a sea of properties requiring cash which would not be able to be financed without such a product.
To AVOID SUCH A 203K Nightmare follow these tips:
Try to verify if they have a minimum of 3-4 203K loans closed in the current 12 month period. This will ensure they are familiar with current guidelines of current banks funding these loans. In the primary loan market unless a firm will keep a 203K loan in an internal portfolio, then there are only about 3 major banks out there who will fund a 203K loan. This means lenders who work with these programs should know in advance who they will send the loan to, and be familiar with their current guidelines, underwriters (if in house or not…HUGE DIFFERENCE!)
and listen to their recommendations as they will truly save you time and money with the knowledge and value added experience they hold.
always working for the same shared goal of the best terms and conditions possible for you, their mutual client and buyer.
Some lenders let you pick from a list, others will tell you it is automatically selected by the lender with no buyer selections available. If you can pick the HUD Consultant contact a few firms to ask their basic cost structure for 203K Consulting, their timeline of availability booking out for inspections. Some lenders require a HUD Consultant be involved for all 203K loans. Others only require them for loans where the repairs exceed $35K.
(under $35K in repairs) and a “Full K” as the 203K savy lenders call it. The more repairs, the longer the timeline needed to complete them.
Keep in mind to protect their interests the bank funding your 203K loan will require all licensed & insured professionals to complete all repairs to town codes with permits. They consider the borrower who works full time to not have the time or level of professional skill, including adequate insurance coverage, to be a risk they will not take on.
Additionally, they will have to carry the project costs for weeks or months at a time until draw disbursements are released. A contractor must agree to these terms and be aware of this or the work will not move along meeting the timelines set by the bank. The contractors selected must have no liens current or prior, and a strong financial and credit profile will be required to be validated and approved to do all repairs. Basically, each vendor needs to be approved by the bank to verify all estimates submitted for the repairs. I’ve heard of a builder being foreclosed and the buyer asking the builder to do the repairs since he knew the building best. Once the builders credit is pulled he will not be approved by the lender as a high risk and conflict of interest. Should the contractor you choose have personal credit issues, this could prevent their ability to be validated as well.
The bank funding your loan will require at a minimum the property meets FHA guidelines. The role of the HUD consultant is truly to protect the borrower from any false information or inaccurate estimates from vendors/contractors. They use a set of industry standard pricing to determine estimates are in line with a norm for work to be completed. You may decide to do repairs above the minimum guidelines, and they must all be included in the HUD Consultants report.
Our Mold Remediation
Scopes of Work and Post Testing Services
If the mold inspection and mold testing of your property detects a mold problem, we will write a “scope of work” that outlines how the mold should be professionally re mediated. This scope of work document can be provided to companies that specialize and focus on professional mold remediation services. Once the mold has been completely and properly remediated, Residential Inspections, Inc. will perform a post inspection and testing to ensure that:
Our Mold Remediation:
Buying or Selling Property?
▪ Don’t sell real property with undisclosed water or mold issues or risk selling property with a possible mold or moisture problem. Engage Mold Inspection Sciences to perform a thorough mold inspection to reduce your liability and exposure.
▪ Don’t consider buying property with existing mold problems. This could reduce the value of the property, subject the occupants to mold and moisture related health problems, force you to pay large mold remediation costs, and could make the property difficult to insure or sell down the road.
You may have a mold problem in your home if you are smelling musty, moldy, or other unpleasant, dank odors. Roof Leaks and Mold Damaged, old, poorly installed or maintained roofs can lead to roof leaks and mold and other water related problem in a structure.
Poor Landscape Grading
Plumbing Leaks and Damaged Fixtures
As a realtor what do you need to do now?
Does the property meet FHA Guidelines
What determines streamline 203K vs. full 203K loan?
Full 203K Loan – There is no limit on cost of repairs/upgrades as long as it is supported by final appraisal value and your budget. Structural repairs are allowed.