If you’ve decided to use the FHA 203K program to renovate a home you are buying or already own, you should be familiar with the role of the FHA 203K consultant.
The consultant only plays a role in the standard FHA 203K, not the streamline version. In other words, if you are making structural renovations or your renovations cost more than $35,000, you’ll need an FHA 203K consultant.
What Does the 203K Consultant Do?
You can think of the 203K consultant as the coordinator. When you make home renovations and use your mortgage to pay for them, there are many people and factors to consider. The loan consultant pulls all of those factors together and makes sure that everyone is on the same page.
The consultant works as the ‘go-between’ with you, the lender, and the contractors. The consultant is a jack-of-all-trades. He understands construction, architecture, loans, and finances. He can consult with you on any aspect of the process, helping to point you in the right direction.
In order to be an FHA 203K loan consultant, the professional must provide documentation to HUD that proves their expertise. In order to find the consultant that suits your needs the most, ask your lender. If you use a lender experienced in FHA 203K loans, chances are that they have a good relationship with one or more FHA 203K consultants. They can recommend the one that will suit your project the most, giving you the best chances for a positive outcome.
What are the 203K Consultant’s Jobs?
So now that you know what the consultant does, how does it pertain to your loan and/or renovations? While each job will be different, in general, you can expect the consultant to do some of the following:
- Inspect the property
- Make recommendations for repairs/renovations
- Prepare the necessary paperwork
- Orders necessary inspections from specialists, such as pest inspections
- Inspects all repairs as they are completed
- Disburses the funds according to the contract
- Provide advice on renovations
The Loan Consultant Fee
As you can see, the loan consultant does a lot of things. They truly are a jack-of-all-trades. Because of that, they do charge a fee. It’s your responsibility to cover the fee along with your loan closing fees. You may have the option to pay the consultant at the closing or roll the cost into your loan. Talk with your lender early on in the process to see if this is a possibility for you.
The fees the loan consultants charge are handled by HUD. You’ll pay a fee based on the dollar amount of the repairs made. Some consultants and/or lenders make you pay for the feasibility study upfront and then you can roll the remainder of the costs into the loan. But because each lender has their own guidelines, it’s important to touch base with your lender.
The FHA 203K consultant is a valuable part of the 203K process. While it may just seem like another fee to you, it’s a neutral party that can help you through the overwhelming 203K loan process. The consultant has your back on every aspect of the process from dealing with the contractors to the lender and everything in between.