203K loans

7 Replies

Is a 203 K loan restrictive as to choosing the contractor, etc ?My mortgage Loan officer tells me it is a tedious process. Is that true? 

The contractor has to be approved by the lender, as to licensing, references, etc.  not that tedious unless your particular lender makes it that way.

Does bank expect new owner to pay for repairs then reimburse? 

Typically its a draw process where the contractor has to be able to perform the work then the bank releases all or part of the money.  It also depends on the level of rehab, there is a 203K Streamline which consist of repairs of 35K or less (nothing structural).  Then there is a 203K that consist of repairs of 35K or more.

Originally posted by @Tony Rogers:

Typically its a draw process where the contractor has to be able to perform the work then the bank releases all or part of the money.  It also depends on the level of rehab, there is a 203K Streamline which consist of repairs of 35K or less (nothing structural).  Then there is a 203K that consist of repairs of 35K or more.

So the only person that has access to draws is contractor? Does bank confirm work before releasing funds?  

Selecting and vetting the contractor for 203k's can be very tedious if you do not use a Certified 203k Contractor, which exist in ~20,000 cities in 40 states. Certified 203k Contractors have been formally educated and tested on the 203k and properly vetted through verification of license, insurance, references and financial stability -- all done through an independent third party. Not selecting one of these can and usually does make the contractor process difficult, time consuming and tedious. 

Originally posted by @Paul Welden:

Selecting and vetting the contractor for 203k's can be very tedious if you do not use a Certified 203k Contractor, which exist in ~20,000 cities in 40 states. Certified 203k Contractors have been formally educated and tested on the 203k and properly vetted through verification of license, insurance, references and financial stability -- all done through an independent third party. Not selecting one of these can and usually does make the contractor process difficult, time consuming and tedious. 

 Good to know.

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