I am wrapping up a 203k right now and the final draw is pending. My full 203k had a contingency reserve for 10%. My loan originator initially told me that this contingency reserve could either be put back towards principal or released to me. My new loan officer is telling me that it has to be put back towards the loan.
I was hoping to see the contingency reserve at the end of my rehab to complete extra work that was outside of the SOW.
Is there any FHA regulations, forms, etc that can explain the rules for using the contingency reserve?
I am not sure. I did a 203k and I don't remember what happened with the contingency. Did you do the work yourself or use a contractor?
@Dan Liptak contractor.
Maybe you can work some thing out with him. Tell him the situation.
The remaining money can be used to perform more approved repairs. If there are no more approved repairs it goes to principal paydown. I know it details this on the FHA website, as I was reading it yesterday. Look for the 203k faq.
Yes, if not used for approved repairs it goes to principal reduction, only.
Thanks for directing me to the FHA site (seems obvious) but i found what i was looking for!
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