My house is under construction, can I get a loan to finish it?

Home Inspector with, covering the USA S0289

My house is under construction, can I get a loan to finish it?

Money to finish my construction projectYes, actually and you have a choice. But Beware!

I recently was called when another consultant did a 203k inspection and write up. The loan was about to close when the title company refused to provide clear title. In case you aren't aware, the title company will always drive by the house they are insuring just before it is to record. That has always been the protocol. 

In this case what they saw was a brand new garage slab and driveway. OOPS! Title companies don't like construction to be apparent at the time they are guaranteeing the title. What if the contractor doesn't get paid and files a lien? 

Don't do that! When a client owns the house and they are getting money to complete their project I will tell them never do any work that can be seen from the street, keep the contractors away the day it is to record. No contractor trucks in the front yard with ladders and people standing around unless you want to kill your own deal. 

The solution was to have the consultant remove all of the items just completed, the borrower has to pay for that out of pocket and we had to find another title company. Remember they are insuring against any liens to give you clear title and when they see work going on the title just got muddy. 

You won't typically have this issue on a sale or purchase transaction but if you close your deal and then the client applies for a new 203k loan or any renovation loan for that matter, the work must not start till your new loan closes. 

I was talking to a San Jose contractor yesterday when I asked how business was and he said he has been missing so many opportunities because he just doesn't have the time to bid these new projects. I reminded him of our "lost opportunity" bidding we do for him. He said he hadn't heard of it. Once I explained how he merely sends us out to bid on his behalf. It looks like he won't loose so much future work now that we have that cleared up. If you are having trouble getting bids from contractors right now we may be the answer to your prayers. 









Posted by

Mike Young, 203k Team Leader    Mike ready for your 203k order

To learn more about the FHA 203k loan program go to www.203kOnLine.comWhat is your fee? 

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