The FHA 203K loan helps you buy and renovate a home. You can even use it to refinance your current home and have money to renovate it. You will have to exercise caution though as not all FHA lenders offer the 203K program. Even the lenders that do offer it aren’t always the right answer. You want to make sure you choose a lender that understands the program and can execute it flawlessly for you.
So how do you find lenders that offer the loan? Keep reading to learn more.
Find FHA Approved Lenders
Your first step is to find FHA approved lenders. These lenders are plentiful. You can use the HUD tool or search online on your own. Once you find approved lenders, your next step is to ask them if they offer the 203K program.
Once you have a list of several lenders offering the program, it’s time to interview them to learn if they are well suited for your needs.
Asking 203K Lenders the Important Questions
When you look for 203K lenders, you want to know the following things about them:
- What type of experience do they have with the loan program? Just because a lender is approved to offer them doesn’t mean they are good at it. They might not have processed any loans like this yet. Your best bet is to find a lender that has funded many of these loans so they worked out the kinks and are ready to work on your loan without issue.
- What is their turnaround time? The 203K loan takes longer than a standard loan in most cases because of its complexity. Because of this, it’s important to ask the lender about their standard turnaround time. If they are already backlogged on other FHA loans, you may want to use a different lender that has a faster turnaround time. This ensures that they will have time to work on your loan and give you the answers you need.
- What are their requirements? Some FHA lenders have overlays or additional rules they add onto what the FHA requires. The 203K program still has flexible guidelines even with the amount of money it offers you. If you come across a lender that has a lot of extra requirements, it might be hard to get your loan closed. Make sure you meet a lender’s guidelines before moving forward.
- Do they have relationships with loan consultants? If you opt for the full 203K program, you will have to hire a loan consultant. This person works on your behalf and organizes everything between the contractor, yourself, and the bank. You want someone trustworthy and with experience. If the lender has loan consultants they work with already, it could help you make the process less stressful.
As you can see, you have your work cut out for you when looking for a 203K lender. Not all FHA lenders offer them and if they do, it doesn’t mean they are great at it. You want a lender that is willing to go the extra mile for you and get your renovation loan done right the first time so you can have the renovations you need done on your home or a home you plan to buy.