203k Loan Program Process and The Importance of a NJ FHA 203k Loan Consultant

The 203k offers a solution enabling homebuyers to finance the purchase of a home as well as the cost of its rehabilitation through a single mortgage or to finance the repairs of one’s existing home.  The process is straightforward but also detailed; therefore, hiring a NJ FHA 203k loan consultant will enhance a homebuyer’s experience in securing this loan.  There are two types of 203k loans – Full k and Streamline k.  (To read more about the Full 203k verses Streamline 203k loan programs click here.)

The 203K Loan Process

The buyer works with his realtor to find the desired home.  The buyer should then hire a HUD approved NJ FHA 203k loan consultant to determine the required repairs and desired wish list (not to include luxury items like a swimming pool).  The fee charged by the NJ FHA 203k loan consultant can also be included in the mortgage.  The realtor submits a sales contract noting that the offer is subject to 203k financing.

The NJ FHA 203k loan consultant will write up a feasibility study to determine the required repairs and the wish list repairs.  This step is imperative for the NJ FHA 203k loan consultant and appraiser so that the buyer does not over-improve the home therefore exceeding the comparable properties in the neighborhood.

The buyer and consultant will obtain estimates from reputable, licensed contractors for the work to be completed.  All the rehab work must be completed within 6 months.  The documentation for repairs must be approved by the lender.  A Full FHA 203k and a Streamline 203K allow for the use of multiple contractors with written estimates obtained from each.  If the buyer is a licensed contractor, his estimate is also allowed. 

Once the NJ FHA 203K loan consultant completes his feasibility report, the lender will forward it to the appraiser for an after improved value.  The final report will be fine-tuned by the NJ FHA 203K loan consultant, appraiser, and buyer.  The file is submitted to the lender for underwriting and approved, and subsequently the normal closing steps take place. 

If the buyer needs to live in his current home or pay rent during the construction, there is a plan to help with double monthly home cost bills.  The buyer can include 6 months of mortgage payments in the new loan amount since it is assumed that he will have two housing payments during the rehabilitation of the new home.  This money is deducted each month during the construction period. 

Once the closing occurs, the construction must begin within 30 days.  Disbursements are made throughout the rehab from the escrow account and are typically comprised of five payments.  When the final inspection is complete per the contract, the final disbursement is made, and the Certificate of Occupancy is issued, the deal is absolute. 

There are distinct differences in the requirements for the Full 203k and the Streamline 203k loan processes.  The lender and the NJ FHA 203K loan consultant can ensure the homebuyer/homeowner is on the right tract to completing the paperwork properly.

NJ FHA 203k Loan Consultant

It is vital to the success of the loan to hire an experienced NJ FHA 203k loan consultant.  He ensures the process goes smoothly and efficiently.  The steps he oversees are primary to the success of processing of the Section 203k insured loan.  The NJ FHA 203k loan consultant is responsible for the bid package to be accurately consolidated for the lenders. 

At EXIT Realty Group of NJ we have strong relationships with reputable NJ FHA 203k loan consultants.  We work with them to ensure a successful process from the writing of the sales contract to the delivery of the Certificate of Occupancy at the end of the rehab.  The NJ FHA 203k loan consultant is indispensable to the overall success of the loan process.  Contact Charles “Chuck” Hendershot at (908)256-4285 or chuck@exitrealtygroupnj.com to help you on the path to homeownership as well as repairs to your current home with the 203K loan program.

Charles “Chuck” Hendershot is an Exit Realty Group NJ real estate expert in Bernardsville, NJ.