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Old 05-06-2012, 05:41 AM
 
Location: BARTLETT,TN hopefully moving to Millington,TN
4 posts, read 5,970 times
Reputation: 10

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My husband and I are pressed for time because we are renting a home and MUST give notice to our renter so we are not stuck with our first months mortgage note and a rental note at the same time. Our real estate agent is suggesting he let " his guys" do the 203k construction work on our potential home. We don't have much time to get several estimates from contractors. Should we trust him with " his guys" or should we get several contractor estimates? I do not want to offend him and Im sure he has some great contractors that he works with normally but I feel the need to ask him if he would get "his guys" to give us an estimate while we also get our own estimate. perhaps it would urge "his guys" to give us a more competitive price than they would have originally?
Also....we have mentioned several times that we would like to roll the first mortgage note into the loan and we keep getting blown off being told it isn't necessary. SIGH....
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Old 05-06-2012, 06:20 AM
 
Location: Lakewood Ranch, FL
5,643 posts, read 9,652,066 times
Reputation: 6861
Since I don't know your agent or his guys, all I can say is you are obviously not completely comfortable with this situation so tell him to get you an estimate and get another two yourself. Also, ask for some references and actually call those people or, better yet, ask those people if you can come over and see the work in person.
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Old 05-06-2012, 08:01 AM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 13,934,037 times
Reputation: 3862
Quote:
Originally Posted by bbronston View Post
Since I don't know your agent or his guys, all I can say is you are obviously not completely comfortable with this situation so tell him to get you an estimate and get another two yourself. Also, ask for some references and actually call those people or, better yet, ask those people if you can come over and see the work in person.
I agree. No one should be offended when you get competitive quotes, and research the work of each bidder.

If his guys are competitive then he should welcome your getting other bids.

Your agent should also disclose if he has any financial relationship with his guys. Is he a part owner of his guys company, or does he get a kickback. It's ok as long as it's disclosed, so don't be hesitant to ask. It's business - not personal.
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Old 05-06-2012, 08:30 AM
 
Location: MID ATLANTIC
8,299 posts, read 21,120,144 times
Reputation: 9652
Just a couple comments - and I also don't know his guys.

There is not an abundance of lenders doing the 203K. Getting more than one estimate could be challenging.

I have yet to hear of a 203K loan making its contract closing date, nor it's first draw.

When you get these guy's name and company, google both. Check them out in ripoff report and search the company here.

As the other poster said, trust your gut and follow it. Those that ignore it are most likely sorry.
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Old 05-06-2012, 10:38 AM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 13,934,037 times
Reputation: 3862
I think I'm correct in saying that the 203 plan pays the contractor direct, and I believe they will pay them in three payments, after they provide proof or the work progress.

Many contractors want you to pay them 50% down. Do not do that. That will confuse things because the plan will still pay the contractor, and you have to hope the contractor will give you your money back.

Insist that the contractor work with the plan 203 rules. No exceptions. Several years ago my client had one, and I believe it was a 203.

The contractor insisted on the client paying 50% down. His reason was that he had to pay his sub contractors. I know that the contractor will not pay his sub contractors until they finish their work, so don't buy into that.

We told him that if he wanted the job he had to follow the plan 203 rules. When he saw that it had to be that way, he agreed. By the way, I never referred that contractor again.
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Old 05-06-2012, 01:41 PM
 
Location: Salem, OR
15,005 posts, read 36,915,656 times
Reputation: 15589
I have done several 203k's recently. Whether they are "his guys" or your guys, you need to pick a contractor and a lender that know all of the 203 rules and paperwork. Otherwise it will be a nightmare of epic proportions to get the transaction closed. You need to pick a general contractor that has a lot of cash in hand. The 203 program only allows TWO draws. One at the beginning that can ONLY be used for materials to purchase and the second is at the end about 10 days or so after the final FHA inspection. This means that the general contractor has to be able to pay cash out of pocket to any subs for work completed while they wait to get paid by FHA. If your contractor can't do that, then he/she needs to make sure the subs are clear that they can't get paid for a while. You don't want contractor liens on the property. They are not easy loans to do and while I know you want to get your own quotes, make no mistake that putting in an inexperienced in 203k loan process contractor will make your life very difficult and stressful.

So ask your lender what contractors have done rehab loans with them successfully. Those are the contractors to call.

My 15 cents worth.
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Old 05-06-2012, 02:48 PM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,958 posts, read 20,846,508 times
Reputation: 6430
Amen to Silverfalls and Smart Money's comments. We have done a couple of 203K's and neither of them worked out as we were told they should have.
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Old 05-09-2012, 05:02 AM
 
Location: MID ATLANTIC
8,299 posts, read 21,120,144 times
Reputation: 9652
Just a couple of quick comments - there are two different 203k programs: 203k streamline and 203k (tradtional). The streamline is limited to 5K in repairs, of which none may be structural, and the other is up to 35K in repairs, and requires the property be in need of at least a minimum of certain major repairs. Know which one is being recommended and research it.
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Old 05-09-2012, 07:26 AM
 
Location: Columbia, SC
10,228 posts, read 19,984,092 times
Reputation: 9039
I agree with the comments but I do have a question from smartmoney's last post. I thought the streamline was up to 35k and the other exceeded 35k.
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Old 05-09-2012, 08:04 AM
 
Location: Tempe, Arizona
4,511 posts, read 12,815,509 times
Reputation: 2199
Quote:
Originally Posted by Brandon Hoffman View Post
I agree with the comments but I do have a question from smartmoney's last post. I thought the streamline was up to 35k and the other exceeded 35k.
That's what I thought too .

Edit - we are correct:

203K Rehab Loan Insurance - HUD

Streamline 203(k) Mortgage

The "Streamline"(K) Limited Repair Program permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser. More...
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