MST, I'd recommend using the HUD search to determine their 203k-ness, not calling them. Plenty of lenders will say "Yes, I do 203ks" and they really only do the streamlines. To qualify for the streamline, there cannot be ANY kind of structural repair needed (I have minor ones on mine) OR you have to get the seller to fix those by closing. In addition, the repairs have to come to about 30k or less - because with fees and contingency, you'll be at or above 35k and that will prevent you from doing the streamline.
Take the OHFA list and compare it to the lenders that come up from the HUD link - limit the search to just 203k lenders and those lenders should be the ones that do the full 203k. I had plenty of lenders tell me they did 203ks but leave out that they only did streamline. You're not going to be able to do a streamline with that amount of work.
OUTSTANDING!!!!! I will do some double checking!!!! You have been so helpful!!!!!
Very important. RESEARCH YOUR CONTRACTOR! research, and do more research and research again! Even the 203k approved ones. If you choose one that isn't, make sure they are well educated with the process, you can get them validated and authorized to work on your 203k project.
Make sure they will have funding available, bc more than likely they will have to front for materials, etc. Get bids from at least 3. Cheapest doesn't always mean best. You are only allowed so many draws on the renovation portion of your loan. For the streamline, it was 2. They overnighted the checks to us, made out to the contractor and I, both before and after.
We chose one that we thought had the best references, checked him out, (we learned from Holmes on Holmes on HGTV) and it was still a nightmare. A month project turned into FOUR.
Be on top of them no matter how annoying you feel you're getting. I'm Very serious.
Open a joint account with the contactor, and only allow them to pull per completed project portion. For example, if portion #1 is windows, allow the draw from the joint account you created with the contractor for that portion only. GET RECEIPTS! Every dime spent out of that renovation account. Even for little things. He should have you on speed dial and always keep you updated. Document anything said in writing.
Workers smoke, so unless you like cigarette butts everywhere, be on top of that.
We gave the 1/2 up front and the guy used our funds to help his other jobs and gave us bs a number of times.
Remember You are the customer, don't be afraid to fire the contractor and get someone else if they are not up to par. Your 203k loan specialist and the disbursement specialist are there to answer any question, don't be afraid to ask!
Patience is going to be your best friend, because you will be stressed during this time, that is a guarantee!
In the end, it was worth it! We got our home, with new hardwood floors, kitchen tile, windows, a bad addition demo'd down, and a nasty pool brought back into operational condition, at a great deal. And I would do it all over again!
Great tips isis. Having competent contractors is key. Thanks for sharing your story.
OMG!!! If I wasn't nervous before I am now!!! LOL!!! This is great advice I want to thank you so much for taking the time to do this!!! I have an offer in, but we have not heard anything yet...it is an REO so I have been told that they are usually slow with counter offers!!! I am checking into contractors and I will most certainly keep this in mind...what is distrubing is that I have heard that these guys will use funds on other jobs..How much was you consultant able to help with this situation??
Isisblue brings up a good point regarding selecting a contractor for the 203k. It is recommended that you select a Certified 203k Contractor, which are located on the 203k Contractor Directory.
MST, there's a difference in draws between the streamline and the full 203(k). I believe you have the option of doing the full even if you qualify for the streamline. You CANNOT do the streamline if: 1) your project is over 35k - that number includes the required contingency etc, so make that more like $30k OR 2) there is anything structural at all.
When you do the full 203(k), you have a HUD consultant who deals with the draws - if you're being jerked around or the job isn't done right, they don't get paid *at all*. They get 90% of the amount for each completed draw item when the HUD consultant has inspected it and they get the other 10% when the locality has inspected. That means that to get paid *at all*, work needs to be completed. It may cost you a little bit more for that peace of mind, but I think it's worth it.
Ok right!!! I am not in the Streamline I have the full 203k!!! We are looking at $50k in repairs.....I know I am going to need as much help on this as possibel!!!! I did find one 203k contractor in Ohio but he is the ONLY ONE!!!! I am not sure what to do from here or if I should just start looking for a couple of other regular contractors that have experience with 203K...yikes!!!!
Where in OH?
The contractor is located in Wadsworth Ohio I don't even know where that is??? LOL!!! I was going to do more searching tonight online...do they use subcontractors possibly in other areas?? Not sure I want to deal with that either!!!