Home buyers and people looking to refinance their home must work closely with the FHA Consultant to coordinate the various steps involved throughout the process. A list of HUD licensed Consultants can be found HERE whereas their approximate fee schedule can be found HERE. The exact fee to be paid depends on the cost of the proposed repair work.
If the residential property being considered for purchase by the buyer is in need of repairs and the scope of the work to be done exceeds the FHA 203K Limited $35,000 threshold, then the following essential steps include the involvement of a HUD approved FHA 203K Consultant.
Initial Site Visit
Call up a local FHA 203K Consultant listed on the HUD consultant roster link noted above and schedule an appointment for the site visit. The entire list of approved FHA 203K Consultant list in each state can be accessed through the HUD website.
Upon visiting the site, the consultant will perform a thorough examination of the property and provides with an assessment about the project’s feasibility under the FHA 203K loan requirements. If the consultant determines that the project is indeed feasible, a formal agreement called the Specification Of Repair (SOR) is signed and the buyer pays a retainer fee. The exact fee to be paid depends on the cost of the proposed repair work. The HUD stipulated fee amounts to be paid to the consultant can be figured out using the general fee schedule.
Architectural Exhibits, Detailed Work Write-up and Cost Estimates
Based on the initial site visit and inputs from buyer regarding their renovation plans, the FHA 203K Consultant will prepare a concise document regarding the project’s scope and specifications. Architectural exhibits along with a detailed cost breakdown for each of the repair tasks will also be included. Additionally, the FHA 203K Consultant will also prepare lender packages and contractor bid packages that contain everything mentioned above. Finally, draw request forms based on the work plan to be followed will be prepared.
Once the detailed work write-up is completed, a copy of the complete package with all the required documents is submitted to the lender, contractor and the borrower.