203K Consultant

203(k) Basics information

• Replacement of Roofing
• Installation of Gutters
• Upgrade of existing Heating, Ventilation and A/C systems
• Upgrading of electrical systems
• Upgrading of Plumbing systems
• Flooring
• Exterior decks, patios, porches
• Weatherization Improving insulation, weather stripping, Attic Ventilation, etc.
• New appliances
• ADA compliance improvements
• Lead-based paint stabilization or abatement of lead-based paint hazards
• Basement finishing/remodeling, which doesn’t require structural repairs
• Basement water-proofing
• Window and door replacement
• Exterior wall re-siding
• Septic system and/or well repair or replacement
• Solar power / water

Following is a list of non-eligible repairs:

• New constructions including room additions
• Repair of structural damage
• Repairs requiring detailed drawings or exhibits
• Any improvement that will take longer than 3 months
• Foundation Repairs or new foundations on existing manufactured homes
• Pool repairs (Other than safety items)
• Landscaping or site-amenity improvements

Construction can begin after the loan closes and a rehab escrow account has been set up. The homeowner has up to six months to complete the work. Some lenders may require less than six months.

Funds are released after the work has been inspected by a HUD-approved inspector. A maximum of four draw inspections, plus a final inspection are allowed.

Yes. After the closing, the borrower must make mortgage payments on the entire principal amount of the mortgage, which includes the amount in the escrow account that has not yet been disbursed.

Your lender must use those funds to prepay the mortgage principal. There is no cash back to the borrower.

Some lenders have a preferred list of contractors that meet their criteria. Be sure to ask your lender about their contractor criteria before hiring a contractor. There are online resources to help pick trained 203K Contractors.

Yes. With a streamline loan, the unit must be owner-occupied. Rehab is limited to the interior.

The 203(k) Consultant insures all HUD minimum standards are met. The 203K Consultant will walk-thru the property with the Buyer to incorporate any client desired improvements, make suggestions which the Consultant believes will enhance the home, as well as the HUD required improvements. Having a Arizona State Certified Home Inspector whom is also a 203K Consultant performing the 203K inspection insure that all Safety, Hazards, minimum State standards and HUD requirements are meet. The Draw Request Inspections, a maximum of five are allowed, insure all repairs are made, pursuant to current building codes and that the finished structure is substantially the same as that upon which the loan commitment is based. There is a line item, in the Work Write-up, where I list the amount paid for the initial inspection. The buyer will be reimbursed, when the 1st Draw Request is made, after work has started. There will also be additional inspection fees, for each Draw Request Inspection, which will be included in the rehab cost and will be billed to and paid by the lender’s Draw Request Funder.

Currently, I’ve noticed, the average fee, for REOs, has been $600 to $700.

The below fees are paid COD, by the buyer at the time of the initial inspection.