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203k Home Renovation Loans

Welcome to the World of Renovation

In today’s market, there is a wealth of possibilities. Imagine your home just the way you want it. It could be updating with new appliances, a splash of color, carpets, or maybe hardwood floors. Maybe what you need is a new roof, a furnace or even air conditioning. The great news is with a Renovation Loan YOU get to decide.

As a homeowner or prospective homeowner you are bursting with Ideas and a Renovation Loan gives you a golden opportunity. With a Renovation Loan you can build the cost of renovating your home right into your purchase or refinance loan. In most cases when purchasing a new home, the work can be completed before you move in.

Let’s get started……

Before Contract

Meet with your Renovation Specialist and determine a comfortable loan that will fit within your budget. Meet with your Realtor and find a home. Develop a list of Renovation Options Interview Contractors (See Contractor Section Below). Research potential costs for your project Make an offer on a home.

After Contract

Order a Home Inspection. Reevaluate your renovation plan and budget. Contact your Renovation Specialist to determine the appropriate Renovation Program.

Before Closing

Before closing your Renovation Specialist is going to need a few items from you.                             Overall description of project and detailed list of materials- Appliances-Make and Model-Cost/ Fixtures-Brand and Model Number-Cost/ Flooring-Type ,Brand, Style-Cost/ Counter Tops-Type, Brand-Cost/ Furnace-Make and Model-Cost/ Air Conditioner-Make and Model-Cost/ Etc…

Your Renovation Specialist will need a list of contractors that you will be using at this time. If you are having difficulties finding contractors, your renovation specialist will be able to help you find Qualified Contractors who will meet the Renovation Loan Requirements.

Determine needed permits and cost of permits. Copies of permits need to be sent to your Renovation Coordinator prior to closing Review Waiver of Lien and Homeowner/Contractor Agreement with each Company /Contractor that will be involved. This is a legally binding contract so be sure completion dates are realistic. Understand that any changes to the contract must be approved through a change order request.

At Closing

You will sign documents that are specific to the Renovation Loan.

You will also sign documents that will release the initial draw of monies from your Renovation Escrow to pay the Contractors. These same forms will be sent to you at the end of the project to disburse final payments.

After Closing

Initial check draws will be mailed 7-10 business days after closing to each of the Contractors involved. Only 50% of the Renovation Escrow for each contractor can be distributed at this time.

You will be contacted throughout the project for progress reports. Make sure your contractor is staying on tract and there are any issues or concerns, contact your Renovation Specialists.

Contact your Renovation Coordinator when your contarctor/s are close to completion. At this time you will be sent a form that needs to be signed and notarized. Signing this form indicates that you are agreeing that the work is completed and you are authorizing payment of the final bill.

Schedule a time with the appraiser to review the completion of all items.

Project Completion

After your Renovation Specialist receives the final inspection completed by the appraiser it will be reviewed by the underwriter.

An accounting of all monies spent will be sent to you and any money remaining in the account will be applied as principle reduction.

When to contact your Renovation Specialist

Before contract and shopping with your Realtor to discuss Renovation Loan Guidelines, time frames and contractor requirements. After contract to determine appropriate Renovation Program, time frames and contractor information. After closing and during project if there are any unforeseen problems or changes within the scope of the project.Before starting or changing any project.When close to completion to order final release of funds and to arrange for final inspection.

What You and Your Contractor Need To Know

We will need to prove that your contractor runs an actual business. We do this by one or more of the following- Check business name registration with the Secretary of State. Check the yellow pages for a listing under contractors business name Google for a web page.

We may ask for one or more of the following items- Tax Document to prove that the contractor has filed taxes under a business. Liability Insurance/or License Reference for 2 or more suppliers where the contractor may have a credit account.

Your Contractor will need to sign a Waiver of Lien and a Homeowner/Contractor Agreement. These forms are FHA Documents and as such are binding contracts that need to be reviewed carefully.

An initial draw of up to 50% may be released with a Streamline Renovation Loan. Checks are usually disbursed in 7-10 business days after closing. Any work started prior to the first check is done at the contractors own risk.

Any work that may require a permit must have a permit in place and a copy of the permit must be sent to your Renovation Coordinator before closing in order for the initial draw to be released.

A copy of the final signed permit must be sent to your renovation coordinator before final funds will be disbursed.

Frequently asked Questions

Q-Can I add projects as I go?                                                                                                             

A-No. Additional projects will be covered without prior authorization by your Renovation Specialist. Furthermore, any incomplete or additional projects could affect your final inspection and appraised value.

Q-Can I do my own work?                                                                                                                  

A-No. The investor considers doing the work yourself as an added risk.

Q-Does the same contractor do everything?                                                                                         

A-Usually not, often contractors are specialty contractors and your project may require two or more. Some projects may even be completed by a general contractor.

Q-How do I get permits for the work that requires them?                                                                        

-In most cases your contractor will take care of pulling permits. Permits can vary from county to county and for specific questions you should contact your local Planning and Zoning Office.

Q-Will a time and estimated materials bid from my contractor be enough?                                               

A-No. You will need a detailed list of work, a list of permits needed and a firm bid for work must be completed.

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