WHAT IS A 203 (k) LOAN?
The 203(k) loan is a fully disbursed loan, which allows a borrower to purchase or refinance a property and finance the cost of rehabilitation with one loan. Because it is fully disbursed at closing, HUD can insure the 203(k) loan as soon as the loan closes. The mortgage amount for these loans is based on the projected value of the property with the work completed, taking into account the cost of the work. HUD has taken a strong position to encourage this program and the loan is now easier to originate and close than ever before.
USE A CONSULTANT
203(k) Consultant Fees The 203k consultant's fee varies depending on the cost of the repair work to be financed through a FHA 203k loan. The actual fees may vary from the amounts published by the HUD in its general fee schedule for the consultants performing the feasibility analysis report and other associated tasks. For the HUD established fee, a 203k Consultant will personally visit the property and provide all the necessary architectural exhibits along with a complete work write-up.
Once the detailed work write-up is completed, a copy of the complete package with all the required documents is submitted to the lender, contractor, and the borrower.
Choosing a Contractor The borrower will then invite bids from contractors to complete the work listed in the consultant write-up. Before you proceed with the contractor bid process, make sure your 203k lender agrees to it. Most active 203k lenders may have a pre-screened list of eligible contractors and they may stipulate that the work is done through one of them. If not, they may have a set of requirements for a contractor handling the rehab work. It is highly advisable to work with a contractor who is well aware of the 203k guidelines and understand the steps involved in it. If you are going to be working with a new contractor who has no prior experience, make them understand the drawing process and the work completion schedule as determined by the 203k consultant in the write-up package.
Draw Request Inspections The 1st draw will be processed once the consultant determines that all the necessary permits have been issued from the local authorities. Depending on the completion of the work identified in the write-up as per the determined schedule, the consultant will make subsequent inspection visits and issues draw amounts.
The base fee is $400 for the repairs that range between $5,000 to $7,500. For amounts ranging between $7,501 to $15,000 the HUD 203k consultant fee is $500. For renovation work amount between $15,001 to $30,000, it's $600. For the cost of rehab work that falls in the range of $30,001 to $50,000, the 203k consultant fee is $700. The fee will be $800 for fix-up work that falls between $50,001 to $75,000. If the proposed repair work costs between $75,001 to $100K, the fee would be $900. In those rare cases where the renovation work to be undertaken exceeds $100,000, the fee shall be $1,000.
The above mentioned FHA 203k consultant fee amounts are meant for single family residential homes. For multi-family homes, the fee charged may be higher. Typically, it would be an additional $25 for each unit beyond the 1st one. If you are considering 203k financing using a streamline loan that allows for financing repairs under $35,000, there is no need for a feasibility analysis report performed by a consultant on HUD roster. For consultants that may need to travel beyond their local area(>30 miles for the round trip), mileage costs may also be chargeable along with the regular HUD established fees. Even if you used an independent consultant to do the feasibility analysis, a mandatory pre-appraisal inspection must be performed by a HUD-accepted fee consultant to ensure that the property is in compliance with 203k program's guidelines and requirements. To perform this review, the utilities must be on prior to the site visit.
The fee to be charged is fixed and depends on the amount of repair work. For properties that require less than $15,000 in total rehab work, the fee is set at $100. For the repairs that range between $15,001 to $30,000, the fee for a consultant is $150 and $200 for any work above $30,000. These fees are based on the review of single-family homes. For multi-family properties, an $50 per each additional unit applies, provided these units come under the same case number as the primary unit. In cases where an additional review may be necessary, another $50 as fee is applicable.
Upon visiting the site, the consultant will perform a thorough examination of the property and provides with an assessment about the project's feasibility under the 203k loan requirements. If the consultant determines that the project is indeed feasible, a formal agreement is signed and the buyer pays a retainer fee. The exact fee to be paid depends on the cost of the proposed repair work. The HUD stipulated fee amounts to be paid to the consultant can be figured out using the general fee schedule.
Architectural Exhibits, Detailed Work Write-up and Cost Estimates Based on the initial site visit and inputs from buyer regarding their renovation plans, the 203k consultant will prepare a concise document regarding the project's scope and specifications. Architectural exhibits along with a detailed cost breakdown for each of the repair tasks will also be included. Additionally, the 203k consultant will also prepare lender packages and contractor bid packages that contain everything mentioned above. Finally, draw request forms based on the work plan to be followed will be prepared.
What Is a Home Inspection?
A home inspection is a report on the overall condition of a home. A thorough home inspection gives the buyer details about a home’s structure, foundation, electrical, plumbing, and more. A home inspector checks the areas of a home beyond what a buyer can see on the surface. Getting a home inspection is important because it helps the buyer know if a home may need costly repairs. What is uncovered during an inspection can become part of a sales negotiation between buyer and seller, and their respective real estate agents.
Why do I need a Home Inspection?
Buying a new home may be the biggest investment you'll ever make. Although the process is very exciting it quickly becomes overwhelming. While the home you have selected may appear to be just what you're looking for, how can you be sure there aren't potentially serious unknown defects which can make your investment in your future a costly one?
Having your new home professionally inspected by our company as early as possible in the buying process can save you thousands of dollars on items which you may be able to have the seller or builder correct. Our company is dedicated to providing you with valuable information about your new home.
We inspect all major components of the subject property to expose unknown defects and advise you about future maintenance about your home once the purchase is complete. Our company will give you the information you require to make an informed decision.
We provide home inspection services throughout the city of Chicago, Cook, DuPage, Kane, Lake, McHenry, and Will counties in Illinois.
How do I choose my home inspector?
Call up and ask about their credentials and experience. If for some reason you don't feel comfortable asking this of the inspector when speaking with them on the phone then how will you feel asking questions at the inspection? You must feel that the inspector is qualified, experienced, and attentive to your needs.
What qualifications or credentials should a home inspector offer?
When choosing a home inspector, begin with a list of association members in your area. Then check to see who among these is the most experienced and has the most outstanding reputation for thoroughness as an inspector. And be sure to attend your inspection. That way, you'll learn as much as possible from your member inspector. Some have college degrees in fields related to construction such as engineering and architecture. A few have passed the same code certification examinations that the building code officials are required to pass.
What will the inspection cover?
A thorough Inspection covers everything from the roof to the foundation. Visit our services for details
How long will the inspection take? Most Inspections take about three to four hours. These times may vary depending on the size, age & condition of the home.
Should I be present during the inspection?
We recommend that you be present at the site of the inspection, from start to finish.
Why use our Services:
The purchase of a new home is one of the single most costly investments that a family will make. Along with the extra stresses, this will add, there is also the fear factor of, "Will This Home Stand The Test of Time?" It is also important to know what YOU, as the primary investor, are getting for your money. A home inspection is an excellent tool for you, the home buyer, to help determine not only the condition of the home but to also help foresee any immediate unnecessary additional cost that may go unnoticed without the help of a home inspection. Home inspections are not a prediction of future performance but can pinpoint existing problem areas.
Why can't I have someone in my family who is very handy or a contractor inspect my new home?
This is the biggest mistake many potential new homeowners make when purchasing a home. Although the person you are considering may be very skilled, they are not trained or experienced at professional home inspections. Professional home inspection is a unique skill like no other. Professional inspectors get what we call an inspector's instinct for problems. That instinct takes extensive training and lots of experience doing inspections to develop. Many contractors and other trades professionals hire a professional home inspector to inspect their homes when they make a purchase.
What if I have questions after the inspection?
You can call us and discuss all the aspects of your new home whenever you like. Our service is a long-term investment. Visit our contact page.
What are your hours of operation?
We are open Monday through Friday from 8:00am to 5:00pm, Saturday 9:00am to 5:00 pm, and we are closed on Sundays.