Contractor Dizzy? 203k Home Loan Close Easy

RENOVATION LOAN 
As purchase or refinance

203k FHA

Does the HomeStyle product have Certificate of Occupancy requirements like the 203k?  For instance, can a borrower purchase a home that is 75% built and current owner can't or doesn't want to finish construction?

The HomeStyle product requires the home to be 90% completed at the time of purchase.

Is there a $5000 repair minimum requirement for a refi with the 203K Limited product?

There is no $5000 requirement minimum or any minimum on an FHA 203k Limited. 

Is the Borrower allowed to change contractors if they are unhappy with the work?

It is very challenging to change contractors as money has been paid to contractors and is difficult to retract.  The contractor needs to complete the work as per the agreement.  But they can change contractors after closing if that is needed. If you change contractors the first one can lien the project and place a cloud one title. It is difficult to determine how much the first contractor is owed, how much work completed may be subjective and difficult to prove. I once had a construction project where the contractor had a heart attack on site. He didn't die on site, his wife tried to save the job while he was hospitalized a couple weeks. His work was good. The bond was not enough to complete. Check out your contractor carefully- check recent jobs, find your own references. Chicken Ron says don't be caught with a contractor who doesn't show, shows up dizzy, or can't see the wall from the door. Chicken Ron puts his head dress in a pony tail because he knocks things over.

What happens if the work done by the contractor doesn’t pass inspection?

This rarely happens but it does happen!  The contractors are vetted and sometimes there are disputes on how things are done.  If the project is completed in an acceptable condition, they will be paid. If the work is not acceptable, we will withhold payment until it is acceptable as per the Appraiser or Inspector. Shoddy work is a nightmare. You thought you would be complete on time. Time costs money.

When using the 203K Limited product can you use big box stores like Home Depot to do the work?

Yes!  This happens all the time.  For major companies like Home Depot, special rules are in place for documentation and in some cases the documentation requirements are less.

If there is only one contractor, then there will be only one draw, correct?

Yes, that is exactly right.  If there is a general contractor with sub-contractors, the general contractor is responsible for paying those sub-contractors.

Is Land Gorilla a required company or does FNMA require that Land Gorilla be used on all HomeStyle loans?

FNMA requires to use an experienced Homestyle draw management and review company.  We chose Land Gorilla.  They are our third-party contractor for Homestyle loans ONLY.


C G Barbeau NMLS 324982   (949) 784-9699