A 203k loan is a full-expense loan that allows the borrower to purchase or refinance real estate and to cover the cost of rehabilitation in a single loan. The amount of the mortgage loan for a 203k is based on the estimated value of the property with completed work taking into account the value of the work. HUD has taken a stand in support of this program and it is now easier than ever to get and repay loans. If the residential property being considered for purchase by the buyer is in need of repairs and the scope of the work to be done exceeds beyond the 203k streamline guidelines, then the involvement of a HUD-accepted 203k consultant will be required.
The consultant evaluates the property and identifies the repairs or improvements needed to bring it up to standard. This assessment helps determine the scope of work that will be covered by the 203(k) loan.
The consultant creates a detailed Work Write-Up, which is a comprehensive document that outlines all the necessary repairs, renovations, and improvements. This document serves as a guide for contractors during the construction process.
The consultant provides cost estimates for each item of work outlined in the Work Write-Up. This helps in determining the total loan amount needed to cover the repairs.
The consultant ensures that all proposed repairs and improvements meet the FHA's minimum property standards and local building codes.
Throughout the construction phase, the consultant monitors the progress of the work to ensure it is being completed in accordance with the Work Write-Up. They may perform periodic inspections to verify that the work is on track. If any changes or unforeseen issues arise during construction, the consultant may need to issue change orders to update the scope of work and associated costs. Once the construction work is completed, the consultant conducts a final inspection to confirm that all repairs and improvements have been done satisfactorily.
They serve as a liaison between the borrower, lender, and contractor to ensure that everyone is informed about the progress of the project and any necessary adjustments. A HUD consultant should have expertise in construction and renovation, as well as a thorough understanding of FHA guidelines and local building codes.
Total Home Inspections has partnered with Makeover Consulting and Inspections as a referral source to make introductions to parties that are familiar with the renovation loan, realty, general contracting, home inspections and consulting. If you are a lender, realtor, contractor, homebuyer or inspector, please watch the video below to understand the Makeover Mortgage process.