How long does it take to close a 203K loan?

Question

Basically, how many steps are there to close?

Kevin A. · Answer

@Damien Buchanan

There is a great thread here ( http://www.biggerpockets.com/forums/311/topics/138412-diary-of-an-fha-203k-loan-deal?page=1 ) where @Clay Manship is chronicling the whole process.

Nicole Pettis · Answer

@Damien Buchanan it really depends on if you get a streamline($35k & under) or a standard($35k and over). Streamline takes about 40-45 days to close and I believe standard takes 60, because of the FHA inspections that have to be done.

Once you have the inspection and move forward with the contract then you gather estimates for the work that needs to be done. The bid/estimates have to come in at whatever amount you are borrowing. Code work has to be done first before cosmetic and landscaping is not part of the deal. You have to use a General Contractor or up to 3 different contractors. The GC has to be EPA certified. Estimates will probably take about two weeks to gather depending on the contractors. Once you finalize the estimate then closing will move forward. Once estimates are in then a week before closing an FHA appraiser will go out and point out any code work that needs to be covered along with the appraisal value of the house. Once that is done, then you close.

The leg work you have to do is with the contractors, meeting with them, going over the house and gathering all the estimates and information. So have your scope of work ready when you meet. Also I suggest networking and finding some contractors that are willing to do 203k work before you start, because there will be paper work involved for them, not much but some. If its a streamline, they get 50% up front and then 50% at the end. Work has to be done in 6 months and you have to have a final appraisal before they receive the final amount.

Hope this helps..let me know if you have any other questions.

Good luck!

P.S. Love Wilmington!