Financing in 91767>Question Details

Kpine001, Home Buyer in 91767

We are looking to buy a 203K FHA house but are confused on how the203K program works. I understand It can fix upto $35,000 in repairs or energy

Asked by Kpine001, 91767 Fri May 14, 2010

efficiency but how the money is allocated or where it would originate from puzzles me. Would the accepted offer price have what whatever repairs needed be included to mortgage or would be the accepted offer price additional repairs be the mortgage? I am confused, please help. and how does the escrow repair account work?

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The contractor bid (work & fee as your putting it...I think) is reviewed by the 203k consultant to make sure all is in line with expectations, time lines and cost with both the borrower & contractor which then both the bid from the contractor and work write up prepared by the consultant is submitted to the lender for approval.

The consultant is not approving the contractor but the consultant is approving the work that is going to be done.

I hope that helped and under the post section on the right side of...http://www.203kmortgagelender.com/blog
More info. regarding that can be found.

Thanks
1 vote Thank Flag Link Sat May 15, 2010
Thanks .
0 votes Thank Flag Link Sat May 15, 2010
Let me make sure that I have this straight. The buyer can use any contractor as long as they are licensed and bonded. Does the work and fee need to be submitted and approved by the consultant before the work can be done?
0 votes Thank Flag Link Sat May 15, 2010
Hi Patrick,

On the streamline FHA 203k up to $35k in repair or rehab no 203k consultant is necessary just optional.
On the full FHA 203k over $35k in repairs, rehab or remodel it is mandatory to have a 203k consultant but the consultant has nothing to do with approving the contractor.

The lender does not have an approval list for contractors so the buyer can pick anyone they want as long as they are licensed, bonded and in good standings which can be checked on the contractor state license board website for your particular state.

As far as doing the work yourself, it is very limited on what the lender will allow the buyer to do.

Also, the lender does not choose the 203k Consultant it is the buyer's choice as well. The buyer can pick out anyone they want that is an approved 203k Consultant which can be found on the HUD website.
Their role is more of a gate keeper to make sure the cost and timelines can be met.

Any further questions or information needed go to the "BLOG" at: http://www.203kmortgagelender.com

Thanks
0 votes Thank Flag Link Sat May 15, 2010
I have a buyer on one that is going to do the first closing on 5/26. The contractors have paperwork to submit to the lender if they they are not already registered and they need to sign that they will complete the work for their quote.
In othjer words the plumber need to have an opperational system when they leave and can not charge $00.10 more for the work than their contract no matter what they run into. Thay may however charge less.
0 votes Thank Flag Link Sat May 15, 2010
Marvin,

Doesn't the contractor need to be approved by the person overseeing the loan? I didn't think that you could do the work yourself or use any contractor.
0 votes Thank Flag Link Sat May 15, 2010
It is your purchase price plus cost of repairs added together. From that total amount your downpayment is calculated. For instance $300k sale price + $35k in repair or rehab = $335k total. Minimum down payment of 3.5% is now based off of the new total amount.

Sale price and repairs can go over the appraised value by 10% and the contractor does not need to be approved just needs to be up to date on licensing and in good standings.

Visit this site to get all your FHA 203k questions answered.

http://www.203kmortgagelender.com

Good luck
0 votes Thank Flag Link Fri May 14, 2010
There are guidelines that go along with the 203K loan so you should ask your lender for details. The loan is for the purchase price plus the repair amount.

The house must appraise for what the house will be when you add in the repairs on top of the purchase price. In other words if the purchase price plus the amount of repairs when finished over prices the house for the market, then the loan will not be approved.

The money for the repairs needs to be approved as does the contractor by a 203K adviser assigned to the loan.
0 votes Thank Flag Link Fri May 14, 2010
mortgage=Offer price= (house +repairs)?
Mortgage=(accepted offer price + repairs)???
0 votes Thank Flag Link Fri May 14, 2010
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