Home Buying in 60076>Question Details

Ben, Home Buyer in Chicago, IL

Hi, I looking at a house. It's basement walls has some mold on them. I was told that I won't be able to get

Asked by Ben, Chicago, IL Mon May 18, 2009

the FHA. In this case, I should get a FHA 203K Streamline. But Can I hire some one not lisenced to do the renovation, or can I use my owner lisenced constructor?

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Nike (Nikki) Fasanya, aka Nike Knows Mortgages!’s answer
In addition Ben, please note that you only really need a 203k Plan Consultant for a Regualr 203k loan (over $35,000.00). You normally would not need one for a 203k streamline loan.
Hope that helps.

Nike
0 votes Thank Flag Link Thu Jun 11, 2009
Hi Ben,

I am a 203k Loan Originator (See http://www.marvelmortgage.com). You will need a Licensed and Bonded contractor with at least 2 years of experience. Rates will usually be about 1/2 a percent higher than regular market rates because the loan is being given based on future value. You should talk to your insurance company about rehab insurance while this is going on.
This is a pretty simple loan for Marvel Ventures to do. Please keep FHA loan limits in mind, for your location. You can find that on the HUD website, and you can actually link to HUD from our site.
Please educate yourself very thoroughly before you get into this or any other mortgage. Our joy is to see you, not just a homeowner, but a successful one.
I look forward to hearing from you.
Nike Fasanya
0 votes Thank Flag Link Thu Jun 11, 2009
Hi Ben,

I am not familiar with loan interest rates. If you call around to a few mortgage brokers that handle FHA and 203K they can tell you what they are.

The 203K consultant's job is to initially review the property and create a rehabilitation plan. From there the 203K consultant will oversee the actions of the contractors performing the rehabilitation work. Here is a HUD letter that does a good job of explaining the 203K Consultants role and the 203K process. http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/fi… This is a more in depth description of the 203K program, http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm. This is the main HUD WEB page for the 203K and Streamline program, http://www.hud.gov/offices/hsg/sfh/203k/203kmenu.cfm. HUD's WEB site is a bit disjointed and hard to follow at times.

If you have any questions about these don't hesitate to ask.

Emmanuel J. Scanlan
PS Inspection & Property Services LLC
http://www.psinspection.com
214-418-4366 (cell)
TREC License # 7593
International Code Council, Residential Combination Inspector #5247015-R5 (Electrical, Mechanical, Plumbing and Building)
Certified Infrared Thermographer (ASNT-TC1A Standards)
Texas Residential Construction Commission, Third Party Warranty Inspector #1593
Texas Residential Construction Commission, Inspector, County Inspection Program
Texas Department Of Insurance, VIP Inspector # 08507061016
Hayman Residential Engineering Services, Field Technician
CMC Energy - Certified Energy Auditor

Knowledge is power, but sharing knowledge brings peace!!
Web Reference: http://www.psinspection.com
0 votes Thank Flag Link Tue May 19, 2009
Hi, thank you for the answers. Mold on basement walls that indicate the possibility of flooding, may cause by foundation crack. That's why some lenders would not approve. The problem could be a minor thing such as humidity, borken sump pump, or serious as cracked foundation. Will the 203K Consultant just check the mold clean out? or the Consultant will take out drywalls to check the source?
By the way, is the interest rate for for 203k higher than the regular FHA?
0 votes Thank Flag Link Tue May 19, 2009
Hello Ben,

According to the Illinois Department Of Public Health there are currently no licensing requirements for mold Inspectors or Remediation Professionals. You can find this information at http://www.idph.state.il.us/envhealth/factsheets/mold_qa_fs.htm. As a borrower in the 203K program (mortgagor) you will be picking the contractors to work on your home. However HUD has placed the following requirement (from HUD docs):

"the mortgagor must provide the mortgagee with a written cost estimate(s) and references from a duly licensed and bonded contractor(s) for each specialized repair or improvement."

Since IL does not specifically license Mold Inspectors or Remediators I would discuss this with your mortgage provider. Your mortgage provider might have established requirements you must follow which can possibly include who can perform the mold remediation.

I would also like to make one more recommendation. If you are planning to use a 203K loan then you are going to be required to have a HUD Certified 203K consultant oversee the work being performed that the rehab money was loaned for. With that in mind I would suggest that when you pick your Home Inspector to perform your initial inspection make sure they are also a HUD certified 203K consultant. Since they will be inspecting the home they will be familiar with the 203K requirements and ensure their inspection takes these into account. They may also reduce their 203K consulting fee if you use them for the 203K portion of the requirements. They will also possibly already be on the mortgage providers list of 203K consultants.

Good luck on buying your home.

Emmanuel J. Scanlan
PS Inspection & Property Services LLC
http://www.psinspection.com
214-418-4366 (cell)
TREC License # 7593
International Code Council, Residential Combination Inspector #5247015-R5 (Electrical, Mechanical, Plumbing and Building)
Certified Infrared Thermographer (ASNT-TC1A Standards)
Texas Residential Construction Commission, Third Party Warranty Inspector #1593
Texas Residential Construction Commission, Inspector, County Inspection Program
Texas Department Of Insurance, VIP Inspector # 08507061016
Hayman Residential Engineering Services, Field Technician
CMC Energy - Certified Energy Auditor

Knowledge is power, but sharing knowledge brings peace!!
Web Reference: http://www.psinspection.com
0 votes Thank Flag Link Mon May 18, 2009
I think if your total renovation are less than $15K and you go with a streamlined loan then it is up to your lender what requirements there are for contractors.

I've had only one client use a 203K, but I learned a lot in the process - hopefully you can benefit from what I learned
0 votes Thank Flag Link Mon May 18, 2009
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