1) Find a lender and get pre-qualified... This is the logical first step as we need to ascertain the loan amount that you may qualify for or the maximum loan amount that keeps you at your comfort level. They may be two quite different numbers. We want you to feel comfortable that your payment is clearly within your budget. Many of our clients actually qualify for more than they want to make payments on & there is nothing wrong with that. In most cases the seller won't even accept your offer unless you have a "pre-qual letter" so they know you have already talked with a lender and started gathering your financial information. The lender can only process the paperwork after you provide it to them.
2) Get with one of our 203k real estate professionals to assist you in finding a property suitable to your needs, or alternate... you can also refinance your existing loan and get the money to rehab it in the same loan. Our professional teammates are going to show you several homes to choose from that need some degree of repairs. Not to worry as all those repairs are completed as part of the loan & rehab process. The great thing is that YOU get to choose the carpet, paint, and configuration of the property you are buying. I've always believed that a home isn't actually yours till to change the carpet and put your personality in the color schemes. If your real estate professional tries to steer you away from a 203k call me, please. Why wouldn't you want to gain additional equity in a home you are buying. You put down 3.5% but may end up with 20-25% equity, that what the 203k loan program is all about.
3) Call us at 1.877.207.6565 (customer service) to set up an appointment for a 203k Consultation. We will meet you at the site, go over the contracts and agreements that you will need to sign at the close of escrow. You will be given copies that you can take home & read at your leisure, mark up and get your questions answered by the lender or our staff. In addition we will make an inspection of the premises at this time. We walk through with you and determine what "must be repaired" then add your "dream list" of additional items specific to your needs & wants. An inspection report will be created which is the "cornerstone" of a good 203k loan project. We need to analyze what it will take to bring this property up to the FHA Minimum Property Standards...in addition you may add any other work to the list of repair items within the guideline. You may choose to have a "home inspection" in addition to our property inspection. That is certainly your right. Many of our inspectors are home inspectors or licensed contractors who are capable of making that Home Inspection Report as well or you can choose someone else... remember that YOU are in control of the process.
4) Now we will go back to our office and create a "Job Specification & Bid Request". This is a list of the repair items that we intend to complete on your project. This "specification" is what will allow all of the contractors who bid this project to bid on the same list. This is important as you want them bidding "apples to apples". Up till now there is no real need for a contractor to have been to the site because we didn't know what work was to be completed.
5) Once the "Job Specification & Bid Request" has been created a copy will be given to the lender and another copy to the buyer or owner who is refinancing the property. It is technically the buyer's responsibility to see that the bid specs get out to several contractors for bid purposes...in reality the home buyer typically will sit on the report and procrastinate and you'll loose precious time. Our software allows you to print the job specs with or without the consultants prices on the forms. FHA would like to see every bid come right from the contractor in a "blind bid" situation without any outside influence from the consultant. This will typically double or triple the time the contractors will spend getting the bid ready for the borrower. We have typically identified the borrower's choice for a contractor by this time and send it to them as well. If the borrower hadn't made a choice by this time we will send randomly to people on our "validated contractor" list who are willing to bid this project for the borrower. By the way, the appraisal can be ordered once the bid specifications are complete as that tells them the "scope of work" they need to determine value.
6) When the bids come back the borrower will choose the contractor. We are always available during this process to assist the borrower & offer suggestions as to which bid is the most appropriate for this project. It isn't always the lowest bid by the way, sometimes a bid comes in so low that it is clear they didn't understand the specs or too low to actually complete the project. The lender can close the loan.
7) The contractor is notified that the loan has closed so he/she can schedule the work to begin. Once the work begins the contractor will require continuing inspections to get progress payments for the completed work. The contractor or the home owner can initiate this draw request. The lender will initiate one if you don't do it in a timely manner.
8) This procedure will repeat itself until the project is complete.
Associates in all areas of the USA using our 203(k) software
1.707.812.7668 Fairfield CA
1.877.207.6565 works for all of our locations