If you and your family are ready to remodel your home and your considering a 203k loan to fund the project, where can you begin?
You will need to find a lender that offers 203k loans. Keep in mind that not all banks offer 203k construction loans. One of the biggest lending institutions – Wells Fargo actually recently pulled out of the 203k market. They ran a very good program however there are several others that you can go to.
If you and your family are serious about getting a 203k construction loan for a complete home remodel such as an add a level or home addition Ask Dave about his list of banks that offer these services. Some are easier than others to work with.
The 203k Appraisal Process
Let’s assume you found a contractor and a bank to work with. Now the fun begins with the paperwork that is required from the bank. They will require both the homeowner and the Bergen County Contractors to fill out forms. The personal financial info should be relatively straight forward for you to submit.
Here is a huge timesaving tip…
Make sure your contractor has worked with 203k loans before. From this point forward, if that contractor doesn’t understand the necessary steps to take then it can be the difference in a quick loan approval to one that drags on for months. However one of the most important aspects of this loan instrument is that your home must appraise at a predetermined value to make this process move forward during your complete home remodeling project.
The bank rep during the process may be pushing to get all sorts of paperwork completed, however simply try to submit just the necessary information required so that the bank can get the house appraised. If the house doesn’t come back appraised at the necessary amount,, then you will need to find another lender. ( Not all lenders are the same). Once you meet the appraised amount, then continue with the additional paperwork such as the contractor approval process.
Contractor Approval- 203k Loans
| Let’s say you found a bank for your home additions and the appraisal comes back in your favor. You also found a contractor that you think is perfect for the project. The contractor receives the contractor verification package from the bank and 30 days go by only to find out that the contractor has been denied approval from your bank. Sound unlikely? It happens all the time. This will hold up the progress of your project from getting started. The main holdup is that the contractor simply doesn’t understand all the paperwork that is required. Then after the delay of waiting for the paperwork to be submitted, the bank many times denies the homeowner from using that contractor due to lack of funding or credible supplier accounts and even lack of previous 203k experience. |
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Contractor Approval Let’s say you found a bank for your kitchen addition project and the appraisal comes back in your favor. You also found a contractor that you think is perfect for the project. The contractor receives the contractor verification package from the bank and 30 days go by only to find out that the contractor has been denied approval from your bank. It happens all the time. This will hold up the progress of your project from getting started thus preventing the progress on your Master Bedroom Suite Project. The main holdup is that the contractor simply doesn’t understand all the paperwork that is required. Then after the delay of waiting for the paperwork to be submitted, the bank many times denies the homeowner from using that contractor due to lack of funding or credible supplier accounts and even lack of previous 203k experience. |
The Nightmare of Nightmare’s
The worst case scenario happens all too often. The nightmare of nightmares is when the work has halted on your project. Throughout the year, I am contacted by homeowners in the middle of this nightmare. They selected a contractor that they thought was reputable. They were told that they could do the job. Many times, the homeowner will select a contractor to build as an example a family room which based on price alone as a deciding factor. It ends up being a costly decision.
Their contractor many times underestimated the project thus providing a cheaper bid. They end up not being able to carry the costs of the project and it then comes to a head midway through.
Remember that the bank only pays as items are completed based on a predetermined itemized deduction list. Most of these loans only allow maximum 5 payouts. There is also a 10% hold until the project is completed. So that means that the contractor has to carry the costs of the project throughout that timeframe unitl he requests a disbursement. If he underestimates and runs out of funds, then you and your family are left in the dark.
I can’t tell you how many homes I visit throughout the year that are left uninhabitable. Worst part about it is that the bank has already disbersed funds to the contractor. The balance of funds left over many times are not enough to warrant a second contractor to come and finish the project. You do not want to be left in this position.
203k Loan Conclusion
Try
to find a contractor that has worked with 203k loans before. If your
home is a complete home renovation, make sure that contractors 203k
experience is with similar projects.
Find a bank that has a more streamlined 203k approval process. Some
banks can hold up the process more than others such as disbursements and
general customer approval.
Avoid a Nightmare and don’t just hire based on price. Conclude your
decision based on several factors – price not being the main item….
203k Loan Specialist
203k Specialist
Pangione
Developers is a qualified 203k contractor. We have worked with many of
the leading lenders.
If your family is in need of funding, Dave can provide a list of banks that offer exceptional service and a streamlined approach. This will save you a lot of time and aggravation.
Owner David Pangione can walk you through the 203k
process without delay upon borrower approval. If you have questions
about a 203k loan – ASK DAVE