Home Buying in 44111>Question Details

Whatdidido, Home Buyer in Cuyahoga County, OH

Why does a 203k fha REHAB loan take so long?

Asked by Whatdidido, Cuyahoga County, OH Sun Jun 3, 2012

I am trying to buy a house. I found the house,made offer, had inspection and appraisal all of which went well, signed loan papers May6,2012 and it's been sitting at the underwriters for the last three weeks. Now I have a great credit score ,a lot of years at my job with no gaps so there are no red flags AND my contractor is a certified 203k contractor who filled out the papers and submitted his licensure, reerences etc , what is the hold up? The bank says that the have to send that part out because most banks are getting ou tof this kind of loan Thanks

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It doesn't take that long if you use a proven team of professionals. Most aren't therefore they tout 45-60 days to give them time to learn the process in many cases.

Certified contractor is a good start that means they are ready, willing and able to come up with the finds to get started.

If a lender is sending this out to another "funding lender" then they aren't where you should be going for the loan. They are a correspondent. They aren't the decision maker, they will underwrite then send to the funding lender who will underwrite all over again, thus you have a 60 day close.

Find a direct lender who knows the product. Use a consultant and get them involved up front before the contractor so they can insure the contractor knows the health and safety issues not just the bid ticket items.
0 votes Thank Flag Link Sun Mar 13, 2016
Rehab loans typically take a longer time because of the verification process.
0 votes Thank Flag Link Mon Feb 16, 2015
Well be glad you didn't use Barclay Butler..you would probably still be waiting over 9 months. I hear with a good company and good loan officer 45-90 Days complete.
0 votes Thank Flag Link Thu Feb 12, 2015
From my experience with 203k loans, the best advice is to use a lender that offers assistance via third party with 203k processing.
This shortens the closing time by weeks. Try http://www.cfs-mortgage.com/203k for more information.
0 votes Thank Flag Link Sat May 25, 2013
They are sending that part out because they do not do this type of loan very often, is my guess. Our turn times are similar to Scott's, 45-60 days. At this point, you should not change horses unless they kill the deal, as it sounds like you will see the finish line soon!

Best wishes for a smooth and timely closing...Jim
0 votes Thank Flag Link Tue Jul 3, 2012
thanks its hard though the owners who are buying another house contingent on my house closing are really upset and the say I am holding up their lives I feel bad
Flag Tue Jul 3, 2012
I normally can get a 203k done offer to close in 45 days. About 6 months ago the appraiser had a handrail for the contractor to add the bid and that added 2 weeks to the process. There seems to be no sense of urgency until it comes to doing things on the buyers part and then they need the forms yesterday.
0 votes Thank Flag Link Mon Jun 4, 2012
Use a consultant and the appraiser shouldn't have found anything more.
Flag Sun Mar 13, 2016
Both agents are essentially correct. There are estimates that need to be obtained and additional paperwork that needs to be completed. Plus it must be approved by both the bank and FHA which takes longer. Plus, if FHA finds ANY mistakes on the paperwork, its returned to the bank which mush correct it and re-submit. When this happens your application is back on the bottom of the pileand will typically take just as long as the first submittal.

In addition, they may be correct, due to the additional paperwork, fewer banks offer FHA loan which means there could be a 3rd party involved as well.

45-60 days is a good turn around. Depending on the contractors and bank, and particularly the loan officer handling it, we've seen 90+ on some.
0 votes Thank Flag Link Sun Jun 3, 2012
Once it goes through your bank for processing, it is packaged and sent to FHA for approval, they are not speedy and can not be rushed. They could be asking for things that are holding you up. Ask your loan officer for an update. The process usually talkes 45-60 days to close from application.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sun Jun 3, 2012
so the 60 days is from application that's helpful! thanks
Flag Sun Jun 3, 2012
Typically the main issue that delays the closing is the fact you need to get contractors in to give estimates and fill out all the proper paperwork. In this case, it sounds like the bank you're using may not have the 203k loan available as a loan product, so they may be using a 3rd party.

I know lenders that do the rehab loan and specialize in these, if you'd like to speak with them. Feel free to contact me anytime.
0 votes Thank Flag Link Sun Jun 3, 2012
thank you I appreciate your response. My contractor did give his estimates and submit them and yes the bank is using a third party. Had I known I would have not went this route
Flag Sun Jun 3, 2012
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