Which 203K (or other renovation) lenders in NJ can best-protect first-time home buyers from contractors overcharging or doing a bad job? I understand lenders have a system in place for getting bids, screening contractors, inspecting their finished work, etc.
You are somewhat correct; lenders (or a department within the company) who specialize in renovation loans don't act as your GC, but they will ensure bids are reasonable, release funds when inspections and milestones are met, etc.
They will not inspect the job, screen contractors, etc. On a full 203K, that is the role of the FHA consultant. On a streamline 203K, that is the role of the homeowner, or general contractor if one is hired by the GC. Regardless of the loan type, all contractors will be required to be licensed and insured.
What type of work are you looking to get done? Something simple like new cabinets, or a huge job like a full rehab?
The fixer upper is not in livable condition. The water and sewage system is non-functional. We would need to get a contractor in to give us a quote. Other than that, it should be mostly general rehab work such as replacing flooring, paintin. The roof may need updating. We still don't know
In that case, you’re looking at a full 203k, which requires a 203K Consultant. S/he will Be your GC and manage all that for you. You won’t be too involved, other than selecting the consultant and primary contractor.
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