Home Buying in 21771>Question Details

Deon Johnson, Home Buyer in 60653

Is the FHA 203K consultant paid out of pocket for all inspections or is it included in the loan?

Asked by Deon Johnson, 60653 Sat May 29, 2010

I am in the process of seeking a FHA 203K loan. I wanted to know are all of the fees for the FHA 203k consultant out of pocket? I know the first fee for him to come out to do the initial feasibility report is out of pocket but I have been reading everywhere and can not find any info about if fees are paid to the consultant out of pocket every time he comes out to inspect for a draw request, or if the amount of the consultant fees are included in the escrow set aside for the rehab process.

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John Moustis’ answer
All fees are disclosed on the HUD 203(k) website. If that's too difficult to find please feel free to visit mine and you will see that I have outlined the minimal fees on mine. Plus I have a link to the FHA 203(k) website for additional information.
The basic fee starts at $450 for the Feasibility/Work Write up for work typically under $7500 and can go as high as $1000. Most Consultants will use the FHA Fee schedule or they can charge less like I do. My minimum fee is $450 and my top fee is $550. They can also charge additional fees for plan review which is $100.
After the initial walk through the Consultant will prepare their Report after giving you an estimated cost of the required work as well as any work you may want to include and at that point they are entitled to charge the full fee as previously mentioned. If you decide to walk away before allowing the consultant to write up the report, they are allowed to keep only $100 for their time.
Good Luck & feel free to contact me with any additional questions.
Thank you,
John G Moustis
President / Owner
SPARTAN CONSTRUCTION & DESIGN, INC.
Phone & Fax: 630-963-6020
Email: jmoustis@spartancontractor.com
Website: http://www.spartancontractor.com

Quality building, remodeling & consulting services in the Chicagoland area since 1991
1 vote Thank Flag Link Tue Feb 8, 2011
BEST ANSWER
Deon, the quick answer to your question is "it depends".

If the consultant will agree to delay being paid for his work and if the loan officer/lending firm will agree to roll them in to the loan amount, yes.

The risk with including the feasibility study in the loan will have more to do with whether it's feasible to purchase the property (that's why is called the feasibility study). If it does not make sense to buy the property there will not be a closing to roll the fees into. For that simple reason many consultants ask for the feasibility fee up front.

The lender will, (in most cases) allow the consultant's Work Write Fee and the subsequent Draw Inspection fees to be rolled into and made part of the loan. Again, check with your lender.

As a 203K Consultant in Central Mississippi we allow all our fees to be paid at closing and/or rolled into the loan, both the feasibility/inspection fees, the WWU fee and the inspection fee. The risk we assume by allowing the delayed payment is apparent when, for whatever reason, your project does not close. We have a strong consultant contract that explains that if you don't close on the loan you still owe the feasibility study fee and if you then later decide to pull out of the deal before closing and we've put more work in the loan you'll also owe the WWU fee. However, you wouldn't owe the Draw Inspection fee because there would not have been a job to inspect.

Contact the lender and choose your consultant wisely. They may be able to help you save some out of pocket cash during your rehab. I'd love to answer any other questions you might have.

Gary Smith
Web Reference: http://www.my203k.info
3 votes Thank Flag Link Sun May 30, 2010
If you are doing an FHA 203k Loan and are utilizing the services of a licensed HUD 203k Consultant, you will more than likely need to pay the consultant's fee. Although HUD does not regulate these

> consultant fee any longer, most still follow the fee schedule listed below:

203k consultant fee schedule

REPAIR AMOUNT CONSULTANT FEE

$5,000 - $7,500 $400
$7,5001 - $15,000 $500
$15,001 - $30,000 $600
$30,001 - $50,000 $700
$50,001 - $75,000 $800
$75,000 - $100,000 $900
$100,001 and up $1,000

This is not "wrong" by any stretch, but sometimes when it "stretches" the buyer, it might become an issue. Buyers regularly use Gift Funds, Grant Money, perhaps future bonus money or tax refunds, maybe even will have the purchase funds from selling their current residence... these buyers MAY be a bit strapped for liquid funds especially EARLY in the process.

Typically, the Earnest Money Deposit is hefty enough as an out of pocket expense. Then the lender needs $400 - $500 for the appraisal/credit report. Sometimes difficult.
Some Consultants will require that some or ALL their fee be paid UPFRONT

Reference Link: http://fha203kloan.org/investors-eligibility-for-203k-loans/
4 votes Thank Flag Link Wed May 6, 2015
"FHA 203K consultant’s fees are established by HUD and can found on the HUD website. These fees are paid directly to the consultant and not a lender charge. Fees for the consultant can vary slightly by state and by consultant.

REPAIR AMOUNT CONSULTANT FEE
$5,000 - $7,500 $400
$7,5001 - $15,000 $500
$15,001 - $30,000 $600
$30,001 - $50,000 $700
$50,001 - $75,000 $800
$75,001 - $100,000 $900
$100,001 and up $1,000"

More information is online at : http://fhamortgageinfo.com/
1 vote Thank Flag Link Wed Jul 22, 2015
Ive been a 203K cconsultant since 2008 in servicing San Diego County. My fees for the assessment and inspection are paid out of pocket by the buyer. The writeup fees dnd draw inspection are paid through escrow. Those cost are added to your construction loan along with a contingency fund. The money is set aside is pull from escrow every time a draw inspection is processed. The fees vary based on the local market.

It also important to understand that you or your general contractor will need some working capital to come into the project since draws are ONLY paid on completed work.

Its a great program, but not without complete understanding of how the program works. Always work with experienced lenders, contractors and consultants.

Will
1 vote Thank Flag Link Sat Jul 17, 2010
Thanks so much Gary, that was very helpful.
1 vote Thank Flag Link Mon May 31, 2010
If you are doing an FHA 203k Loan and are utilizing the services of a licensed HUD 203k Consultant, you will more than likely need to pay the consultant's fee. Although HUD does not regulate these

> consultant fee any longer, most still follow the fee schedule listed below:

203k consultant fee schedule

REPAKIR AMOUNR CONSULTANT FEE

$5,000 - $7,500 $400
$7,5001 - $15,000 $500
$15,001 - $30,000 $600
$30,001 - $50,000 $700
$50,001 - $75,000 $800
$75,000 - $100,000 $900
$100,001 and up $1,000

This is not "wrong" by any stretch, but sometimes when it "stretches" the buyer, it might become an issue. Buyers regularly use Gift Funds, Grant Money, perhaps future bonus money or tax refunds, maybe even will have the purchase funds from selling their current residence... these buyers MAY be a bit strapped for liquid funds especially EARLY in the process.

Typically, the Earnest Money Deposit is hefty enough as an out of pocket expense. Then the lender needs $400 - $500 for the appraisal/credit report. Sometimes difficult.
Some Consultants will require that some or ALL their fee be paid UPFRONT
0 votes Thank Flag Link Wed May 6, 2015
Only the initial site visit and consultant write-up report the rest are roll in to the montage. AEP Building Consultant Chicago can answer more of your question give us a call. We are HUD certified 203k consultant.
0 votes Thank Flag Link Tue Dec 3, 2013
Hi Deon,
I have a contact that can answer all your questions. He is a FHA consultant, John Johnson johnson203k@verizon.net or 301-834-8675. Let me know if you have further questions or need help finding a property.
Thank you,
Buzz Mackintosh 240-529-0176
Web Reference: http://www.machomes.com
0 votes Thank Flag Link Sat May 29, 2010
Hello Deon:

I am a real estate agent in Mount Airy and work with investors. I cannot specifically answer your 203K Loan answers, however, I know of a great loan officer that loves to do 203K loans and she is very successful at getting them thru. Please e-mail me and I can send you her information.

pattys@longandfoster.com

Thank you, Patty

Cell: 240-876-3424
0 votes Thank Flag Link Sat May 29, 2010
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