203(k) Procedure Step-by-Step

1. Find a lender and get pre-qualified… This is the 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.

2. Get with one of our 203k real estate professionals to assist you in finding a property suitable to your needs, or 2) alternate.., you can refinance your existing loan and get the money to rehab it in the same loan.

3. Call 1.877.207.6565 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 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. 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.

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. This “specification” is what will allow all of the contractors who bid this project to bid on the same list. 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 your clients

6.  When the bids come back the home owner will choose the contractor. 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.

8.  This procedure will repeat itself until the project is complete.