5 Items to Consider When Doing an FHA 203k loan in Texas
The FHA 203k loan in Texas contains a lot of moving parts. Sometimes it’s good to get another perspective on the important pieces of this loan. Also one should remember that a successful FHA 203k loan takes collaboration from all parties, including the contractor.
In speaking with Jason Morris who is a contractor with First Choice Construction in Dallas, TX he shared with me five things he finds key to the 203k transaction:
1. The role of the contractor on every project is to make sure that licensed professionals are on the job sight and that all the work is being completed per the applicable building codes and per the homeowners request.
2. There are 2 types of inspections one should expect with an FHA 203k loan. Both are scheduled by the contractor. The first is usually the city inspection in which the city inspector and the contractor meet at the property and look over the work that has been completed. At that time the city inspector gives the contractor his/her approval to move forward with the project or explains to the contractor what needs to be corrected. When corrections are made an inspection can be rescheduled. After all items have been approved a pass or “green tag” will be issued and work can continue to the next phase. As for scheduling inspections with the 203k Consultant, this usually involves the contractor, homeowner and the consultant. At the inspection the consultant will go over the city inspections to make sure everything is in order before reviewing the completed items with the homeowner. The consultant usually goes line by line through a list of repairs and makes sure the homeowner is comfortable with the quality of workmanship. Once the homeowners satisfaction has been established they are asked to sign a Completion Acceptance form.
3. The main reason for mistakes is a lack of communication between the contractor and homeowner. The most important part of the entire process is going over the estimate in detail to make sure all selections have been made and the price for each item is firm before anything is signed at the closing table or any work begins.
4. In my opinion, good communication and realistic expectations are key to a successful 203k. From the very beginning the homeowners must be made aware that this is not a conventional loan that can be closed in 3 weeks of the date they decide to make a purchase. There is a lot of paperwork involved and several different areas that the homeowner has to be involved in such as meeting with consultants and contractors. In the long run it can be a very beneficial program everyone just has to communicate.
5. Picking a contractor based solely on price is not always the best way to make your decision. Some other factors to consider may be: how much experience does the contractor have with 203k projects, is your consultant or loan officer familiar with the contractor and do they recommend using them and, probably the most important, is how well do you communicate with your contractor of choice.
Remember, if the communication between the contractor and homeowner is lacking there is a good chance that the expectations and final satisfaction will be lacking as well.
If you are interested in this loan or have questions I would be happy to walk you through the process. Please give me a call today!