Renovation Loans
Purchase a home fixer which needs repairs.
So you bought this house and it needs a new kitchen
203(k) FHA Loan May Be the Fixer
You are able to borrow up to $31000 for repairs
What do you need?
Identity of Interest Form
203(K) Borrower Acknowledgement
Work Explanation Letter
Correct Estimate to be signed by borrower and
contractor
Homeowner Contractor Agreement signed by contractor
and borrower for every contractor
Contractor Resume for every contractor
W-9 for every contractor
Business/State Licenses from contractor and subs as
required by state
Liability insurance/bond/workman’s comp- Obtained
from Contractor and Subs (if General Contractor does not have workman’s comp)
Contractor Attestation Letter
Contractor Identity of Interest
Contractor Deposit Acknowledgment
Permit Certification – Reno Specialist to Complete
As Completed Appraisal with Estimate in the
appraisal
FHA 203K Limited Renovation‐ Steps to Success
- Identify the Property! Let’s get it renovated and perfect!
- Review what renovations are necessary or desired. You need to select a contractor. Ask friends who have completed renovations for suggestions. Your marriage with the Contractor is an important relationship.
- The Contractor fills out a Contractor Profile Form This is an important part of reviewing their qualifications to do the work.
- Are they licensed if required?
- You and the contractor(s) sign a Homeowner/ Contractor Agreement. Spell out costs, time frame, and expectations in a notebook. Keep records in the notebook of progress
- Look for comparable homes that have sold in your tract that were upgraded in similar items that you plan to complete. as if all the renovations were completed Have all the proposals in writing given to your appraiser before the appraisal process begins. Provide all the details you can as to finish and upgrades.
- Appraisers may find other issues with the property that were not a part of the original inspection. In these cases, those items must be added to the contractor proposals. Health and safety code violations must be addressed. Install a carbon monoxide smoke detector before the appraiser arrives, as this is required in California code. If you know electrical is ancient, plan on bringing it Into this century. If the water heater is not properly strapped, purchase the kit to make it safe.
- Because renovation loans are a combination of purchase or refinance loans and construction loans, they take time to close.
- Aside from the normal credit and property information, we must also gather and analyze the construction/ rehab part of the loan as well.
- Normally a renovation loan takes thirty days to close. The process stops if we are waiting for the contractor proposals. They are key.
- A renovation loan is powerful product that allows a Buyer to move into a home and then watch it become their Dream Home. Our commitment and expertise can help a Buyer realize that dream.
- FHA and Lead Based Paint
- If the home you are renovating was built before 1978, you may need to use a contractor or painter who is Lead Based Paint Certified.
- Lead dust or chips can be very harmful and toxic, especially to children, and FHA therefore requires that the contractor understands how to keep you and others safe.
Here are some things that may trigger the need for a lead
paint certified contractor:
1. If you are breaking through walls and doing demolition.
2. If you are repainting rooms that have chipped or peeling
paint of if you are sanding painted surfaces.
3. Doing an addition which requires you to expose any
painted surface or break through it.
4. You are doing replacement windows or doors.
5. Bathrooms or other room renovations requiring the
disturbance of painted surfaces.
6. Exterior painting which also includes chipping,
scraping, sanding or pressure cleaning.
When in doubt, let us know so we can discuss it with you
and your contractor.
We want to keep you and your family safe.
CMG Financial is a registered trade name of CMG Mortgage,
Inc., NMLS# 1820 in most, but not all states.
Caroline Gerardo Barbeau C G Barbeau NMLS 324982 (949) 784 - 9699
