“FHA 203K Loans”
Hi Joe
I know it’s been a while. Kim
and I have been working with our agent Shirley looking for houses with
very little luck but we have found a few that we really like, but all
need some work cosmetically, minor work inside like appliances,
electrical, plumbing etc.
All
with good bones, but are bank owned. It could be good for fha loan but
need a 203 k to finish work. How does the 203k loan work? If we get an
outside contractor, does the contractor have to wait for their money or
is it available for payout? This is where I think we need
your help as our agent really has very little knowledge about this
mortgage? Any thoughts on what we do next to get the ball rolling, also
do we need another pre approval? We really need to get into a house of
our own!
In advance, Thanks Kim and Scott
Unfortunately
not all Realtors know and understand the FHA 203K process, especially
when it comes to where the renovation dollars are concerned. There are
basically two different 203 K loans, one that is under $35,000 and a
FULL K which means over $35,000 in renovation costs. There are many
different aspects but for this purpose. I only want to address how the
money is paid out.
For
the under $35,000 there are usually 2 draws for the money, the first
will happen shortly after the closing (even though the work is not yet
completed) and the other at the end of the project when the work has
been completed.
For
the FULL 203K there are a minimum of 2 and there can be many more. It
usually depends on the needs of the contractor. In most cases, work has
to be completed before a draw is paid out. I once had a transaction that
had 7 draws, but we do what we can to limit the number of inspections
as there is a fee charged each time.
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