By Mike Young
It took 12 weeks to get my permits can I get an extension for my 203k? We can't possibly complete the construction in three months that are left on my project. Will they foreclose on my house?
The Standard FHA 203k program was set up to take "no more than six months" therefore you won't get more than six months on the initial set up of the loan. Not a problem normally. I have had a couple contractors not want to do the job if they couldn't get eight months right from the start and that was a shame.
The Streamlined k on the other hand has a sixty day completion date and only one draw or final inspection for completion.
Contractor's make more money per hour the faster they get the job completed, why then do they sometimes take so darn long to complete a project? Mostly due to the delay in getting permits and plans for larger projects but many times it is due to changes to the scope of work after the work has been done by the owner... not a good thing and can cause delay. Some of the contractors we use like to nail down all the materials prior to commencing the project and will not vary from that. You can't blame them for that, the work goes much faster and ultimately the owner is happy if they chose wisely on the materials.
is taking longer than months to complete
What are our alternatives to having to wait so long for the permits to be issued?
When blueprints are needed it is a good idea to have them in hand and approved prior to construction... on a purchase that is next to impossible since you don't want to spend money on the blueprints till you have the sale closed and know for a fact that it is your home.
Close the loan with a smaller 203k like the Streamlined k and do some minimal work to get the loan closed fast. While that work is being completed you get your plans drawn and apply for the permits, in sixty days close another but "standard 203k" as a refinance. All of the money you put down within the last six months gets to be credited as though you just put it down for this refinance. Holy Cow, that is amazing, you say? Yes it is and what is more amazing if you purchased a home recently and realize it needs more work even it it was a for sale by owner or has conventional financing you get to count that original money you put up as a down payment as money in the refinance transaction provided the refi happens and closes within six months of the original purchase.
Contrary to conventional thinking that says you can't refinance until you have six months seasoning, this loan MUST be closed within the six month period to take advantage of this feature of the program.
BTW, we are now covering South Fork CO.