Real Estate Renovations

Posts Tagged ‘FHA insured loan’

The Process: HUD 203K Renovation Loan

In Dept of HUD, Financing, real estate on April 16, 2012 at 10:48 PM

We have decided to  use the Department of Housing and Urban Development’s 203K Renovation Loan. In essence we will be refinancing our current mortgage and rolling in the cost of the improvements we will be making into a new mortgage.

The process for this loan thus far has been relatively pain-free. We are working with a fantastic loan officer who is knowledgeable of his industry and has walked us through the process. I highly recommend using a specialist in this area.

Once through the approval process HUD will send out a HUD Certified Consultant who will view the property and the proposed improvements that will be shown in a completed scope of work, insuring that all necessary repairs are made for habitation.

From there it’s on to the appraisal, this is still a mortgage and it must make fiscal sense to lend money for the project, even if you will be remaining in the property. The appraisal must come back able to support the loan amount you will be seeking for improvements.

After all of that it’s on to closing!!

Another point of the 203K loan is the way the loan is structured.  You are working with your HUD Consultant and your Builder. Monies are held by a third-party and the HUD consultant will release funds to your contractor as needed and ensure and inspect the work is done properly and to completion. You won’t find yourself in a situation where someone runs off with your money or doesn’t do or complete work on your project.  Additionally, the contractor will not be able to collect 100% of his fee until EVERYTHING outline in the scope of work is completed satisfactorily. Neat huh?