Is your 203K work in PA overbudget?

By
Home Inspector with Reading, Pottstown, Norristown, Philadelphia
http://actvra.in/4nRs

 

Is your 203K work in PA overbudget?

piggy bankYou've been approved for an FHA 203K loan and it looks like the construction costs from your contractor are going up quickly.  The 203k work is coming out higher than originally anticipated and you are going overbudget

As a 203k Consultant in PA, I have seen this happen for a few reasons.  One reason could be that you decided instead of linoleum floors in the kitchen, you'd like your contractor to put in some nice marble tiles and perhaps upgrade the appliances.  The other situation I have come across is the contractor starts demolition and, upon taking down the drywall for example, finds that there are structural issues to be addressed before moving on with the project.



These unknowns can happen to anyone when major home renovations are underway.  What happens when the work under a 203k loan is going overbudget?  First, your 203k consultant will typically add in a contingency fee of 10-20% to allow for these unforeseen circumstances.  A change order form is filled out by the 203k consultant and submitted to the loan disbursement
friendly accountant woman officer at the bank who approves the change. 


If the additional work being completed is necessary such as the example of the unforeseen structural repair, the contractor usually gets paid once the work is completed and inspected.  If the additional work is considered an upgrade and something that might not be necessary such as the example of the upgraded kitchen work, the contractor will be paid at the very end to ensure there is enough money for the other items in the original work write-up submission.  If after all the work from the original work write-up submission is completed and there is not enough money in the contingency portion to cover the work, that money needs to be paid out-of-pocket. 


To learn more about the 203K program in Philadelphia, Allentown, Reading, Pottstown, and surrounding Eastern PA, visit www.203kpa.com and get answers to some Frequently Asked Questions.
 


david on a roof

David Artigliere, with ARTI Home Inspections LLC, is a HUD-
Approved 203K Consultant.  He plays an integral part in the
successful completion of an FHA 203k loan transaction and
guarantees rapid turnaround time.

ARTI Home Inspections LLC uses state-of-the-art construction
estimating software and electronic data transfer to consistently
submit work write-ups within 24 hours of the site visit.

 

Posted by

david the home inspectorDavid Artigliere, owner of ARTI Home Inspections LLC, is a home inspector in Pottstown, Reading, Norristown, Royersford and surrounding areas. 

He is available 7 days a week and can be reached at 610-220-1907.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Dan Edward Phillips 07/31/2011 11:27 PM
Topic:
Home Improvement
Location:
Pennsylvania
Groups:
Realtors®
New Jersey & Pennsylvania -- Realtors/Loan Officers/Title Clerks/Real Estate Lawyers
Dedicated Bloggers
Pennsylvania Realtors
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Tags:
203k construction costs
203k budget

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Rainmaker
3,887,367
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Good post on the FHA 203(k) program.  Many of our buyer clients use 203(k) financing when they purchase lender owned foreclosures that have deferred maintenance and repair issues.

 Blooming for home buyers.

Jul 21, 2011 08:34 AM #1
Rainmaker
95,681
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspect

That's true, Roy.  I'm getting an increased number of phone calls on this valuable program this year.  I think the word is getting out on how great it is!

Jul 21, 2011 01:07 PM #2
Rainmaker
855,355
Kwee Huset
Kwee Huset Realty - Venice, FL
Venice Florida Homes For Sale

David, 203K loan is one of the best loan program for the first time home buyer who have limited cash.

Jul 21, 2011 02:35 PM #3
Rainer
478,183
Not a real person
San Diego, CA

I’ve done my share of 203k transactions over the years. It’s a very useful took.

Jul 21, 2011 04:10 PM #4
Rainmaker
2,885,948
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

David, this program does offer buyers options when homes have items needing repair or replacement.    I have had many first time home buyers use this great program.   Great explanation!

Jul 21, 2011 04:46 PM #5
Rainmaker
95,681
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspect

Kwee- yes, it comes in handy for the buyer when the property needs work and they can't afford the money upfront to fix it up.

Russel- the program was popular a while back and fizzled several years ago.  It's certainly making a come-back

Joan- I'm finding this program attracts a lot of first-time homebuyers and people who already own their house and want to make major renovations.

Thanks for reading!

Jul 21, 2011 11:51 PM #6
Ambassador
1,498,015
Renée Burrows
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate - Las Vegas, NV
Las Vegas Real Estate Broker - www.urLVhome.com

I still have yet to close a 203K buyer.  This is very interesting information to know thank you David!

Jul 25, 2011 08:55 AM #7
Rainmaker
95,681
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspect

Good luck, Renee. I think we're going to see more and more of these!

Jul 25, 2011 02:23 PM #8
Rainmaker
571,455
Mike Young
203kOnLine.com, covering California & most other states - Fairfield, CA
FHA 203k Consultant 707-812-7668

Good post, seems like you have a good handle on the program.

Jul 26, 2011 03:34 AM #9
Rainmaker
95,681
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspect

Thanks Mike,  it was easy to get up to speed quickly once the business started rolling in!

Jul 26, 2011 02:51 PM #10
Rainmaker
571,455
Mike Young
203kOnLine.com, covering California & most other states - Fairfield, CA
FHA 203k Consultant 707-812-7668

Years ago I gave a class to consultants in Allentown PA, I wonder if any of them are still in the business?

Aug 27, 2011 06:49 AM #11
Rainmaker
95,681
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspect

Mike,

Good question.  I know some inspectors that went into the 203k business but left for various reasons.  You certainly have to be organized!

Sep 22, 2011 04:48 PM #12
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David Artigliere

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