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What Is a 203k Loan?
A 203k loan is an FHA loan that combines the purchase of a home with renovation costs into a single mortgage. Also referred to as a renovation loan, the 203k loan is available for home buyers as well as current homeowners interested in refinancing and renovating their existing home.
The 203k loan option eliminates the need to apply for multiple loans when either purchasing or refinancing a home that needs some TLC. However, getting approved for the FHA 203k loan and using it to purchase or refinance is just the beginning. Unless you possess all the necessary skills and licenses to do the renovations yourself, you’ll need to hire various contractors to complete the jobs. That’s where a 203k loan consultant will prove invaluable.
What Is a 203k Consultant?
There are specific FHA guidelines that must be followed with a 203k loan. A 203k consultant is well-versed in these requirements, and will make sure the homeowner completes and files all required paperwork and follows the right processes.
What does a 203K Consultant Cost?
Fees for consultants are set by HUD, the Department of Housing and Urban Development and start at $400 for a work write up and inspection. Fees are based on the size of the renovation loan not the size of the house and are capped at $1000. Additional fees can apply based on needed inspections, architectural drawings, and follow up inspections or changes. The good news is most of these fees can be included in the loan, and even reimbursed to the borrower at closing.
Is a 203K Inspection a Home Inspection?
No, these are two different things. As a 203K Consultant we always recommend you have a complete home inspection performed on any property you are planing to buy. Carey Home Inspection can perform both the inspection and the consulting work to help streamline the process. A Home Inspection will cover many items that a consultant inspection won't. The consultant inspection will cover items your lender will require to be repaired and items you want to perform to enhance or improve the property. While there is overlap, these are very different reports and inspections.
If you are interested in an FHA 203K or renovation loan, please feel free to contact us for more information. If your lender as asked you to obtain the services of an FHA 203K Consultant please call us to set an appointment to review the property and begin the process.