All Forum Posts by: Paul Welden

@Jeremy D.

HUD/FHA have 2 online databases that you can search through to locate the lenders (local and national) the the most 203k experience.

Regarding contractors ... best to use a Certified 203k Contractor and not one who will wing it. 

You're only as strong as your weakest link ... select your partners wisely. 

Hope this helps! 

@Viktor Semenyuk

203k renovation costs are generally higher than the same project not doing a 203k mainly because 203k's require more work from the contractor, more paperwork for the contractor, and the contractor has to finance the renovation. 

I would suggest getting a WWU from a 203k Consultant that your lender selects and giving that report to a Certified 203k Contractor to ensure that all pricing and parameters are correct. 

Hope this helps! 

@Jack Stovall

RE Agents only really need to know how to complete the financing section of the purchase contract and the verbiage that HUD requires. Sure, it's helpful if the RE Agent knows the timelines, and other stuff, but they are not as important on a 203k as your other team members.

The 2 most important team members you need are a 203k-experienced lender and a Certified 203k Contractor. 

HUD has 2 databases of the most experienced 203k lenders that you can search through.

Hope this helps! 

@Stephanie James

I recommend you check out the directory of Certified 203k Contractors. There are quite a few on the south side of Chicago. 

Hope this helps!

@Zaid Badabwan

According to HUD/FHA guidelines, the borrower selects the contractor for the 203k, but the lender is required to determine if the borrower's selected contractor is deemed acceptable for the project by verifying their license, insurance, experience, understanding of the 203k, and can complete the project within the scope of work set forth by the FHA 203k Consultant.

Here is where you go to select your Certified 203k Contractor.

The 203k is 1 loan. It includes the purchase money + the rehab money. The rehab money is held by the lender and paid to the Certified 203k Contractor in stages after work has been inspected. 

HUD/FHA guidelines do allow the borrower do to their own rehab on a 203k as long as the borrower is skilled and experienced with the renovations. In areas where contractors are required to be licensed, the borrower must be a licensed contractor to do a self-help 203k. But, and this is a huge but, no lenders allow self-helps on 203k because it's too much liability for them. So, you'll be using a Certified 203k Contractor.

The 203k rehab money added into your loan must be sufficient for a contractor to do 100% of the project. However, after the loan closes, if you are able to save money and the contractor allows you to buy materials, etc. any money saved, will only be used to reduce your loan balance or to do other rehab work on the property. 

Certified 203k Contractors will never allow borrowers to do any of the work because the contractor is required to provided a 1 year warranty (labor & materials) and them allowing you to do some of the work won't be allowed under their insurance policy and negates any warranty. 

Hope this helps! 

@Samuel Choi

Most lenders who are experienced with the FHA 203k can competently do the Fannie Mae Homestyle and the Freddie Mac CHOICERenovation loans.

Just make certain to use a contractor who is experienced with reno loans or one that has been properly educated and had their finances verified such as a Certified 203k Contractor. Without strong financials, contractors will not be able to afford the startup costs and ongoing expenses associated with reno loans, not to mention they will usually get lost with the required paperwork, timelines, guidelines, and processes if they have not been educated on reno loans or had their reno loan experience verified. 

Hope this helps! 

@Dean Fiacco

There are 5 types of loans that can help you accomplish this:

Fannie Mae Homestyle

Freddie Mac CHOICERenovation

FHA 203k

VA Renovation

USDA Renovation

They all allow you to include the purchase price + rehab costs into 1 mortgage and 1 closing. 

I would allow for 45 days closing but 30 can be done if everything goes perfectly according to plan. 

@Dean Fiacco

Quickly and 203k are not usually 2 terms that are associated with each other. 

You mentioned you want to make additions and then acquire it, but the 203k requires that you acquire the property prior to making additions. Additions are not luxury items for the 203k, but the addition must be connected to the main house which can be done with a covered walkway or being directly connected to the main house. 

Closing on a 203k can be done in 30-45 days if you have an experienced 203k lender and a Certified 203k Contractor in the Tampa area ready to go. Otherwise, closing can take 60+ days. 

The 203k experienced lender will select your HUD FHA 203k Consultant which can help you determine how you can accomplish your goals.

HUD has 2 online databases of lenders showing their experience with 203k's.

Hope this helps! 

@Mariah Pierce

I recommend you check out the directory of Certified 203k Contractors. There appear to be quite a few in your area. 

Your only as strong as your weakest link ... select your partners wisely! 

Hope this helps!

@Mary Ainsworth

I have access to a template cover letter that explains the benefits of the 203k that the seller and seller's agent will receive by accepting your 203k offer. 

Also recommend having your 203k Team in place - a lender with verifiable 203k experience and a contractor who have been properly educated and financially vetted for the 203k or even one with verifiable 203k experience. 

The average lender and average contractor are not set up to properly manage the complexities of the 203k. 

There is a directory of Certified 203k Contractors but it appears there are none in your area.