203K/Renovation loans how they work

203K/ Renovation loans can be tough to understand and sometimes go unnoticed as an option all together for home buyers. Like many buyers we are going out searching, hoping to find that perfect home and in some cases it just doesn’t exist. Something always seems to be missing from that kitchen being old to the bathroom being small.

That is where renovation loans come into play. It is really a three person team that needs to come together to make it all work. The Realtor, lender and LICENSED contractor, key word being licensed. I would recommend contacting your lender and make sure they are qualified in such and undertaking and if they are get approved under that criteria. It is the realtors job to go out and find the property. The trick is finding a property that may be semi distressed or in need of some TLC, this way when you propose a plan you can confirm it will appraise at what you need to complete the renovations.

When the offer is accepted and the process begins it is important you put together a plan that the lender can see with prices of work, finishes and layout. The easier to grasp the end product the better you will be. Upon closing the work starts! The contractor begins the work and does it in portions, generally  you complete the work in phases and money is disbursed to the buyer which then pays the contractors. The appraiser comes out makes sure the work is being done and payments are made. This process was done myself for my own personal home and I know it could work for you too!

Check out the video for some more insight and feel free to reach out with questions.