- CONSIDERING ANFOR YOUR HOME PURCHASE?
An FHA 203k home loan allows you to combine your home purchase with any renovations needed. Bottom line – the total investment for your dream home is rolled into one financing option. This opens up the housing market for you, allowing you a wider range of properties to choose from, including fixer-uppers. For the buyer looking for future value in a home, this is the preferred option.
If you find a house that needs a lot of work, the FHA 203k loan is ideal. However, it’s important to note that the work must be done by a qualified construction team. The costs estimated for your renovation are held in an escrow account and are released to you and an approved construction team. None of the work can be done by the home buyer.
Who Qualifies For The Loan?
The requirements needed to qualify for the 203k loan are similar to FHA loan requirements. You typically need a minimum credit score of 500 and at least 3.5% down payment. The only difference will be the amount of the loan.
With a typical FHA loan, the current appraisal amount of the home you’re looking to purchase determines your loan amount. However, with the 203k loan, you’ll be approved for the appraisal of the house PLUS any additional renovations or improvements.
FHA 203k Loan Consultant
WHEN CONSIDERING AN FHA 203k LOAN, YOU NEED SOMEONE TO BE THERE WITH YOU FROM BEGINNING TO END.
Why Do I Need A 203k
The 203k loan stipulates that you must use a consultant to assist in the renovation loan process. From the very beginning, your consultant will guide you through everything related to a 203K loan. They will inspect the property and talk with you about what is needed to meet standards and codes, as well as any additional repairs.
A 203k consultant provides undeniable support throughout the home renovation process. Renovation projects can go south quickly because of contractor-related issues; but with a dedicated loan consultant as an advocate, your investment is in safe hands. Using a 203k loan consultant will help protect your investment throughout the renovation process.
GreenWorks 203k Consulting Services
What is a 203k loan?
An FHA 203k loan allows a borrower to use one loan for the purchase of a home and its necessary improvements (including refinance). 203k loans are guaranteed by the FHA, may be obtained with lower credit scores, and offer competitive interest rates.
What is a 203k loan consultant and why do you need one?
The role of a loan consultant can be compared to that of a project manager and is important to the success of a 203k project. Your consultant will determine if a project is feasible, and if so, create a detailed work write-up. They will oversee all aspects of the project, including contractor accountability, to ensure all repairs are being made properly and in a timely manner.
203k Consultation Process
PRE-SETTLEMENT (CLOSE OF ESCROW) ACTIVITIES
1. Client (or their agent or lender) requests an initial consultation.
2. Consultation is scheduled and performed to determine repairs to be made and if the project is feasible.
3. If a contractor bid has not yet been accepted, a feasibility report is created and delivered to all parties, by the consultant, usually within 3-5 business days (may be longer depending on issues observed/professional services needed).
b. If moving forward, the contractor selection and bidding process will take place.
c. Once client accepts a contractor’s bid, the consultant will complete the final work write-up package, submit to all parties for signature, and forward to lender for closing.
4. If a contractor bid has already been accepted, the consultant will review and ensure that all work is included in the bid along with any/all mandatory HUD items.
1. Contractor will begin work within 7 days of closing.
2. Contractor will request consultant draw inspections for incremental payment of work.
3. Once contractor work is complete, the consultant will perform one last inspection to finalize the project!
Borrower Fees (reimbursable at closing)
1. Consultation & work write-up deposit = $400 + mileage a. ($100 for feasibility evaluation) b. ($300 for final work write-up deposit)
2. Work write-up = Ranges from $450 to $2000 (based on repair amount, see fee schedule below), minus the $300 WWU deposit
3. Any architectural plans needed
4. Inspection services needed (mold, lead paint, etc.)
Fannie Mae Homestyle Loans
Fannie Mae Homestyle loans do not have the same rules and regulations as 203k loans, but as FHA consultants, we are also able to assist with these transactions. This helps to manage the project in the best interest of the client and lender.
Repairs less than $7,500 – fee of $450
Repairs between $7,501 and $15,000 – fee of $550
Repairs between $15,001 and $30,000 – fee of $650
Repairs between $30,001 and $45,000 – fee of $750
Repairs between $45,001 and $60,000 – fee of $800
Repairs between $60,001 and $75,000 – fee of $850
Repairs between $75,001 and $100,000 – fee of $950
Repairs between $100,001 and $125,000 – fee of $1000
Repairs between $125,001 and $140,000 – fee of $1250
Repairs between $140,001 and $180,000 – fee of $1400
Repairs between $180,001 and up – fee of $2000
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