A HUD Consultants job is to make sure the project is in line with HUD minimum requirements for FHA to insure your loan. Whether your purchasing or refinancing with a FHA 203K Loan, and have over 35K in renovations, structural or not, you have to have an approved FHA HUD Consultant to monitor your rehab project, and more importantly, sign off on the initial general contractor bid, before the loan can go into underwriting.
I?ll give you an example. I?m currently doing an FHA 203K purchase in Wash Park where as the buyer has 3 or 4 bids for his $120,000 renovation. With regards to price, the bids were all over the map. The HUD Consultant?s job is to make sure the bids are congruent with the scope of the work based on the FHA minimum requirements. The HUD Consultant is also there to ensure the borrower is not getting ripped off. In this case, he potentially was.
Bids for the renovations were extremely excessive. $13,000 was the bid for the electrical renovation and the windows were bid at $4000. Instead of standard windows, the General Contractor chose expensive Pella brand windows.
As luck would have it, the FHA Consultant on this job who as I say has to be lender approved was the General Contractor for 15 years building homes for Habitat for Humanity. He charges around $200 for an initial bid review, and around $100 every time he comes to follow up with the project before each draw request gets funded by the lender. The lender approved FHA Consultant acts as a Big Brother in place to monitor these renovations.
Often when it comes to fixing and flipping properties, many people try to brave it all on their own. These people usually end up losing money because it is very common for the projects to go over bid.
FHA 203K is by far the safest renovation loan out there, because of the following.
1. FHA 203K Loans come with low interest rates and a 30 year term while private money renovation lending entails a 6-9 month note.
2. Refinance in 60 days with the initial lender into conventional financing. You can also refinance out of the FHA loan if the equity is there. This will carry mortage insurance.
3. You?ll be saved time and money on the project because you?ll have ?big brother? HUD consultant watching over the project and whole process.
I hope I have shed light on the role of the HUD Consultant and how he acts as a Big Brother when it comes to a FHA Rehab Loan and why that FHA Loan is the safest renovation loan available.
Brian Quigley
Contact our Colorado Loan Officer TODAY to ensure your FHA Loans gets done right.
Sphere: Related ContentSource: http://mydiyhometips.com/2011/06/03/hud-consultant-is-big-brother-on-fha-203k-rehab-loan/
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