So there are actually 203k consultants that you can hire to come to the prospective property and develop not only a list of FHA required repairs, but also home improvements that the buyers have on their wish list.
How it works is, if approved, all of the improvement costs would be added to the loan amount, but it would be the lesser of the two following numbers:
1. The estimated value of the property after improvements
2. The purchase price of the home PLUS the cost of the improvements.
The 203k consultant would come back to the property to inspect the work that has been done and to OK the release of hold-back funds after escrow closes to be released to the contractor(s).
The 203k consultant will charge a small fee ($300-$400) for the initial consultation, and may also charge for the re-inspections for the contracted work also, perhaps in the range of about $125.00
I spoke to a 203k consultant earlier today and he explained how it all works.
VERY valuable tool for buyers looking to purchase a home that is in need of rehabilitation or upgrading using and FHA loan. Would work well for buyers looking at foreclosures in need of rehab.
This loan opens up much more possibilities and options for FHA buyers.
