FHA 203(k) Rehab Loans: Questions to Ask Your Contractor
June 22, 2023
If you want to buy and renovate a home using an FHA 203(k) Rehabilitation Mortgage, there are some important steps to take when researching how your renovation work will get done.
You’ll want to get the answers to some important questions that can help you evaluate whether or not to use a given contractor or other service provider.
How Long Have You Been Working as a Contractor?
There is nothing wrong with hiring a skilled-but-new-to-the-industry contractor. But it’s best to know the experience level of your contractor or other service provider in advance.
Compare multiple options, and the experience level of your contractor will matter more if the job is more complex, non-standard, etc.
Do You Have a Portfolio of Your Work?
Not all service providers have one, of course. A plumber would not. But a custom home builder or renovator should. Ask for examples of past work by each company you consider hiring. If they don’t offer a portfolio, should you walk away? That will depend greatly on how they answer the question, “Why no portfolio?”
How Do You Calculate the Costs of My Job?
Typical expenses for renovation work may include hourly labor rates, the cost of materials, and the required fees for compliance inspections. But there are also costs you might not have thought of.
A renovation job will require materials to be hauled away from the renovation site and disposed of properly. Your contractor may need to hire a large disposal container for certain materials removed during your repair or remodeling work.
Does My Job Have Any Special Requirements?
The costs of your renovation work may go up if there are certain issues such as the presence of asbestos in the home, whether there is lead-based paint in the home, or other environmental factors. Federal and state law may have a say in how these issues are specifically dealt with in the renovation process.
Be sure to ask about such contingencies and how they could change the price tag of your project.
If you aren’t sure how these issues may affect the size or cost of your new mortgage, talk to your FHA loan officer about your concerns and don’t agree to anything you don’t fully understand.
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RELATED VIDEOS:
Home Equity Can Secure Your Second Mortgage
Consider the Advantages of Discount Points
FHA Limits are Calculated and Updated Annually
You’ll want to get the answers to some important questions that can help you evaluate whether or not to use a given contractor or other service provider.
How Long Have You Been Working as a Contractor?
There is nothing wrong with hiring a skilled-but-new-to-the-industry contractor. But it’s best to know the experience level of your contractor or other service provider in advance.
Compare multiple options, and the experience level of your contractor will matter more if the job is more complex, non-standard, etc.
Do You Have a Portfolio of Your Work?
Not all service providers have one, of course. A plumber would not. But a custom home builder or renovator should. Ask for examples of past work by each company you consider hiring. If they don’t offer a portfolio, should you walk away? That will depend greatly on how they answer the question, “Why no portfolio?”
How Do You Calculate the Costs of My Job?
Typical expenses for renovation work may include hourly labor rates, the cost of materials, and the required fees for compliance inspections. But there are also costs you might not have thought of.
A renovation job will require materials to be hauled away from the renovation site and disposed of properly. Your contractor may need to hire a large disposal container for certain materials removed during your repair or remodeling work.
Does My Job Have Any Special Requirements?
The costs of your renovation work may go up if there are certain issues such as the presence of asbestos in the home, whether there is lead-based paint in the home, or other environmental factors. Federal and state law may have a say in how these issues are specifically dealt with in the renovation process.
Be sure to ask about such contingencies and how they could change the price tag of your project.
If you aren’t sure how these issues may affect the size or cost of your new mortgage, talk to your FHA loan officer about your concerns and don’t agree to anything you don’t fully understand.
------------------------------
RELATED VIDEOS:
Home Equity Can Secure Your Second Mortgage
Consider the Advantages of Discount Points
FHA Limits are Calculated and Updated Annually
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