Scituate: What is a 203K Loan?
We’ve been talking to a few clients about utilizing the 203K loan option to finance their upcoming remodeling projects. And people seem to have a lot of questions about how the process works. So I thought today was a good time to go over some commonly asked questions that Almar gets from the contractor’s end.[1]
Over the years a lot of clients have used refinancing as an option to help pay for their home remodeling projects, but now 203k loans have become a great option for clients. The rates are generally the same as a refinance, but give you the option to borrow more to help build your home’s value with a remodel.
Living Room Addition
What is a 203K Loan?
You can choose and professional contractor you like. Your mortgage company will need to preapprove them however. To become preapproved the contractor must fill out certain documentation and provide copies of their Licenses and Insurance.
What is a loan consultant?
A loan consultant is someone hired by the mortgage company to work with your contractor. They work as a middle man between your contractor and the mortgage company. They will review the scope of work and costs for the mortgage company. It is the consultant who will make period inspections of the project and submit payment requests to the mortgage company.
Does the contractor get to choose the consultant?
The loan company generally recommends or assigns the consultant to the owner. The contractor doesn’t get to pick, this is a good thing for the homeowner as it helps protect your interests.
When purchasing a new house does the contractor usually give an estimate before the P&S or is it the consultant that does the pre purchase estimate?
Vinyl Sliding Door, Hanover Ma
You have to get a written estimate from an approved contractor before the purchase & sale. The consultant will review the estimate to make sure it looks reasonable enough.
The same is true in the case of a refinance. You will need to submit a formal written proposal from the contractor to the mortgage company before they will finalize the loan documents.
Hopefully this has helped you understand the basic of what a 203K loan is. Because there are many factors to consider while choosing your contractor and financing expert you should give Almar Building and Remodeling a call (781-826-2577) to talk about your project and for more information about you options.
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[1] You should be sure to ask your Mortgage Agent about details specific to your case or loan. All the notes given is general information based on Almar’s previous experience.
