(English) FHA 203(k) – Understanding Its Real Value – Part 1
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I enjoy reading your explanation of the 203K.
Keep up the great work. If you don’t mind I would like to have your permission to make copy your writings and share them with Buyers, Contractors and Realtors here in Austin, Texas.
Jose S. Guerrero
HUD Approved 203(k) Consultant & CI.
Hey Jose,
You are free to make copies of the writings as long as you give Skip Schenker proper accreditation.
We’re glad you’re enjoying our blog posts. We enjoy your comments!
I’m currently in the process of being processed for a 203k loan on a hud home, I was wondering if it is difficult to find a contractor willing to work with this type of loan? The house I’m looking at I would need several contractors rather than just one licensed general contractor for everything. Also on some of the simple repair items such as painting, door hardware, installing light fixtures, are these allowed to be completed by myself rather than spending 2x money and having hired out?
In today’s market, there is no shortage of contractors available. You need to make sure the contractor you choose is willing (and able) to wait for their money until AFTER they have completed work….because that is how the program works. Unless, of course, YOU want to front some money. Here, on LI, we have contractors we use regularly who know how the program works and it is not a problem.
Typically, we recommend one general contractor (unless the borrower is very experienced) because getting approval (resumes, insurances, etc) for all the individual companies for plumbing, electrical, etc. is very burdensome.
Estimates are required to cover a third party to do all work. If you do some of the “simpler” items, and save money, there will be money left in your account when finished which will be applied to reducing the principal balance on your loan (or maybe used to do more work).
Do you have to use a consultant? Or is that just an option to make things easier? Does the GC have to be licensed? Can you be you own GC and just hire subcontractors? Who comes by and checks the work when it’s done to sign off and ok the draws?
1. A consultant is mandated on a 203K (unless it’s a monir job done as a Streamline 203k).
2. GC must be licensed AND bonded. If you are your own GC (which is frowned upon), EACH of your subcontractors must be licensed, bonded and prepared to execute all the appropriate documents.
3. The appraiser and/or the consultant comes to verify the draw requests.