The 203k Consultant is a tremendous asset for streamline loans because he can identify the required health and safety items needed to be addressed in the course of the renovation. The lender traditionally accepts a home inspection and a contractor bid for the streamline as opposed to the Work Write Up/Scope of Repair package the Consultant prepares for the Full 203k. However home inspectors and contractors do not always know what the 203k renovation requirements are to make properties eligible for financing. Because of this, many homes may have delays in closing because the appraiser and underwriters come back with conditions or repairs that were not addressed in the submitted packet.

Another benefit to having a 203k Consultant inspect the property for a streamline loan is that a streamline loan product is only eligible for repairs cost under $30,000, along with other conditions of the property. A 203k Consultant is able to identify any conditions with the property that will disqualify it from a streamline; meaning it must become a Full 203k. For example a crack in a foundation slab or the need to replace an entire roof; as the streamline is not eligible for properties needing structural repairs regardless if the amount was less than $30,000.

For more reasons on how a 203k Consultant can benefit a 203k Streamline Renovation loan please contact us directly and we will be happy to assist you.

• Major rehabilitation or major remodeling, such as the relocation of a load-bearing wall;
• New construction (including room additions);
• Repair of structural damage;
• Repairs requiring detailed drawings or architectural exhibits;
• Landscaping or similar site amenity improvements;
• Any repair or improvement requiring a work schedule longer than six (6) months; or
• Rehabilitation activities that require more than two (2) payments per specialized contractor.
• *See other conditions that apply to this program

What improvements are eligible under the new Streamlined (k) program?

The Streamlined (k) program is intended to facilitate uncomplicated rehabilitation and/or improvements to a home for which plans, consultants, engineers and/or architects are not required.  The Streamlined (k) program includes the discretionary improvements and/or repairs shown below:

• Repair/Replacement of roofs, gutters and downspouts
• Repair/Replacement/upgrade of existing HVAC systems
• Repair/Replacement/upgrade of plumbing and electrical systems
• Repair/Replacement of flooring
• Minor remodeling, such as kitchens, which does not involve structural repairs
• Painting, both exterior and interior
• Weatherization, including storm windows and doors, insulation, weather stripping, etc.
• Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
• Accessibility improvements for persons with disabilities
• Lead-based paint stabilization or abatement of lead-based paint hazards
• Repair/replace/add exterior decks, patios, porches
• Basement finishing and remodeling, which does not involve structural repairs
• Basement waterproofing
• Window and door replacements and exterior wall re-siding
• Septic system and/or well repair or replacement
• *See other conditions that apply to this program

Yes. The work write-up is required to be completed by a HUD-approved 203(k) consultant for the standard 203(k) program.  Glenn Schwartz & Associates is an approved HUD consultant.

The work write-up for the Streamline (k) is not required to be completed by a HUD-approved consultant but, the borrower may request a HUD 203(k) consultant to complete one anyway and the costs of the work write-up may be financed into the loan.  For the Streamline (k), we recommend the consultant do the work write-up, then have the contractor bid the work accordingly.

Can any rehabilitation money be paid upfront to offset the startup costs for the contractor?

No. However, an exception can be allowed for kitchen and bath cabinetry, or floor covering, where a contract is established with the supplier and an order is placed with the manufacturer for delivery at a later date.  This option varies by lender.

Is there a time period on the rehabilitation construction period?

Yes, the Rehabilitation Loan Agreement contains three provisions concerning the timeliness of the work. The work must begin within 30 days of execution of the Agreement. The work must not cease prior to completion for more than 30 consecutive days. The work is to be completed within the time period shown in the Agreement (not to exceed six months); the lender should not allow a time period longer than that required to complete the work.

How many draw releases can be scheduled during the rehabilitation period?

As many as five releases (four plus a final) can be scheduled. The number of releases is normally dictated by the cash-flow requirements of the contractor. An inspection is always required with a scheduled release; however, inspections may be scheduled more often than releases if necessary to ensure compliance with the architectural exhibits, HUD’s Minimum Property Standards and all local codes and ordinances. If the cost of rehabilitation exceeds $10,000, then additional draw inspections may be authorized under certain circumstances.

Does HUD always require a contingency reserve to cover unexpected cost increases?

Typically, yes. On properties older than 30 years and over $7,500 in rehabilitation costs, the cost estimate must include a contingency reserve. The reserve must be a minimum of ten (10) percent of the cost of rehabilitation; however, the contingency reserve may not exceed twenty (20) percent where major remodeling is contemplated. If utilities were not turned on for inspection, a minimum fifteen (15) percent is required.

What happens if the cost of the rehabilitation increases during the rehabilitation period?

Can the 203(k) mortgage amount be increased to cover the additional expenses? No. This emphasizes the importance of carefully selecting a contractor who will accurately estimate the cost of the improvements and satisfactorily complete the rehabilitation at or below the estimate.

Can a dwelling be converted to provide access for a disabled person?

Yes. A dwelling can be remodeled to improve the kitchen and bath to accommodate a wheelchair access. Wider doors and handicap ramps can also be included in the cost of rehabilitation.

Can mortgage payments (PITI) be included in the mortgage?

Yes. Up to six months of payments may be included in the mortgage if the property is not occupied during the rehabilitation period.

Can a local government agency or a nonprofit organization use the 203(k) program?

Yes. The same qualification requirements will be used as for an owner-occupant of the property.

What is the definition of a First-Time Home buyer?

A single person or an individual and his or her spouse who have not owned a home (as a tenant in common or as a joint tenant by the entirety) during the three years immediately preceding the date of application for the 203(k) loan. Any individual who is legally separated or divorced cannot be excluded from consideration, because the three-year waiting period does not apply, provided the individual no longer has an interest in the home.

Can Section 203(k) be used to convert a one family dwelling to a two-, three-, or four-family dwelling (or vice versa)?

Yes.

Can Section 203(k) be used to move an existing house onto another site?

Yes, however, release of loan proceeds for the existing structure on the non-mortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation. At closing, funds would be released to purchase the site and the rest of the mortgage proceeds would be placed in the Rehabilitation Escrow Account. The borrower would have the site prepared to accept the dwelling. The first release would be based on the improvements made to the site, including the installation of the existing structure on the new foundation.

Can a detached garage or another dwelling be placed on the mortgaged property?

Yes, however, a new addition must be attached to the existing dwelling, and must comply with HUD’s Minimum Property Standards in 24 CFR 200.926d and all local codes and ordinances.

Are there any required upfront fees?

Yes, there is a required fee that is due in full for the HUD Consultant at the time of the inspection. This fee is on a staggered scale based on the estimated renovation repair costs. Contact Glenn Schwartz HUD Consultant for a fee estimate.

• structural alterations and reconstruction
• modernization and improvements to the home’s function
• elimination of health and safety hazards
• changes that improve appearance and eliminate obsolescence
• reconditioning or replacing plumbing; installing a well and/or septic system
• adding or replacing roofing, gutters, and downspouts
• adding or replacing floors and/or floor treatments
• major landscape work and site improvements
• enhancing accessibility for a disabled person
• making energy conservation improvements

HUD requires that properties financed under this program meet certain basic energy efficiency and structural standards.

The Full 203(k) will allow for structural remodeling and room additions, where the Streamline does not.  Local building permit requirements apply to both, as required by law or local governance. The following information describes both programs.

What it is:
Section 203(k) insurance enables home buyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home. This is like a 2 in 1 loan with the construction loan portion wrapped into one first mortgage.

Purpose:
Section 203(k) fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. The interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment. However, Section 203(k) offers a solution that helps both borrowers and lenders, insuring a single, long term, fixed or adjustable rate loan that covers both the acquisition and rehabilitation of a property. Section 203(k) insured loans save borrowers time and money. They also protect the lender by allowing them to have the loan insured even before the condition and value of the property may offer adequate security.

You get one shot at a due diligence pre-purchase property inspection – your time frames are tight and hurried; let our experience and vital credentials deliver the best inspection report available, complete with a photo journal depicting the main issues resulting from the inspection.

Choose your inspector wisely, as California does not license the Home Inspection industry.  There is no Substitute for Experience in this business; you either have it or you don’t.   As a result, many new home inspectors fresh out of a 1 or 2 week training school are able to purchase home inspection software with canned comments built in, enabling them to produce a computer generated report, without a lot of practical field experience and understanding. For more information on what it means to be an ASHI Inspector, click here.

With 33+ years experience in the construction and inspection business, we have the experience necessary to deliver to you the best property inspection.

• For Home/ Condo/ Commercial Building Inspection – Our knowledge and study surpasses 60,000 hours of Practical Building Solutions, Supervision & Inspection Services .

• California does not license home inspectors, we hold the best and highest credentials available.   Mr. Schwartz’ State Licenses and National Certifications include:  California General Contractors License, ASHI Certified Inspector designation, ICC Certified Building Inspector, ICC Certified Building Plans Examiner, ICC Certified Plumbing Inspector, ICC Certified Mechanical inspector, NAHB CAPS (Certified Aging-In-Place Specialist), Bachelors in Arts degree from California State University – San Marcos and an AA Degree from Palomar College – San Marcos; including college work in building codes and standards and numerous hours of continuing education in this field.

Inspection Analysts services most of Southern California, locations include but are not limited to: San Diego, El Cajon, Chula Vista, Escondido, Carlsbad, La Jolla, Del Mar, San Marcos, Vista, Oceanside, Fallbrook, Temecula, Murrieta, Encinitas, Alpine, Lakeside, Miramar, Carmel Valley, Poway, Rancho Bernardo, Rancho Penasquitos, La Mesa, Pacific Beach, Ocean Beach, Mission Valley, Coronado, Kearny Mesa, Santee, Bonita, Spring Valley, Imperial Beach, Solana Beach, Rancho Santa Fe, Mira Mesa, Cardiff By The Sea, San Clemente.

Additional Inspection Services include: Pre-listing inspection. For Sale by Owner/Pre-sale Inspection, Probate Sale Inspection, Pool & Spa, Crawl Space, and Manufactured Homes.

Click For a Residential Inspection

Click For a Commercial Inspection

As professional insiders with 11+ years of 203k Consulting experience, we are able to guide you through the 203k Rehab loan process maze.  Inspecting to FHA Health & Safety Standards, we also tie together your needs and wants into your dream home renovation.   Our final report incorporates the required repair items and incorporating your needs and wants into your home renovation Work Write-Up.  The particular home and borrowers will need to meet program and underwriting  requirements to successfully secure a renovation loan.

Our specialized knowledge of the program and process becomes a benefit to the borrower, seller, real estate agents and loan officer.   We are able to anticipate concerns, work efficiently and have a better understanding of how the HUD Consultants role fits into the whole process with the borrower and lender to facilitate a more seamless end result. Time lines are always of the essence in financing transactions so an efficient loan process is important. Whether you are purchasing a foreclosure, short sale, REO property or refinancing your own home for a remodel; our guidance will assist you throughout the process, from the beginning inspection, all the way through the completion of the construction.

What is a 203(k) Rehab Mortgage?

Full 203(k) Mortgage with a HUD Consultant

FAQ regarding the 203(k) loan

Streamline 203(k) Limited Repair Program

What items remain ineligible for the Streamline program?

Article: A 203k Consultant Provides More Bang for Your Buck

Article: 203k HUD Consultant and the Streamline Renovation Loan

Click here to download a 203k HUD Consultant request form

Click Here for More Information Directly from HUD