The FHA 203(k) is a great loan, and these steps will provide you with a road-map to understanding the process.
1) Buyer works with realtor to find the right property, or owner is ready for renovation on their existing property.
2) Get pre-approved by lender for the price range and repair estimate.
3) Go to contract on the house noting that it is FHA 203(k) financing (for a purchase).
4) Buyer meets with HUD Consultant on site to complete the work write up and estimate of repairs.
5) Lender orders appraisal of the property. The appraisal must contain the before and after renovation value of the home.
6) Close on house escrowing the funds for repairs and upgrades.
7) Contractor starts work and draws down funds for repairs and upgrades.
8) Move in to your new home or settle in to your new and improved home.
The FHA 203(k) inspection, work write-up and cost estimate are essential elements in processing the Section FHA 203(k) insured loan, in addition to the underwriting steps applicable to a regular mortgage. Therefore, when a consultant is used, it is the responsibility of the consultant to assure that the architectural exhibits are properly prepared.
These steps will help guide you through the FHA 203(k) process and get you into the home of your dreams.