How Do I Choose My FHA 203K Lender?

Choosing a FHA 203K Lender

Why Is 203K Lender Selection Important? What Should Potential FHA 203K Clients Look For?

203k.tv When I started specializing in 203K Renovation Loans there were very few people that offered the product. There was little to no training and you were mostly resigned to using a lender that would end up selling the loan to a certain big 4 bank that, quite frankly, sucked.

Times have changed, there are multiple 203K lender options these days and it seems that every loan officer now offers the product. Competition is good right? It is good, for the most part.

It is fantastic for the foreclosure market that lenders have finally joined the show and made the 203K loan widely available. After all, foreclosure renovation loans, like the 203K, the HomePath Renovation and the HomeStyle, are integral pieces to restoring the housing market.

However, the growth of the renovation loan market comes with a price. Lost earnest money, useless inspections, ridiculously long escrows, angry sellers and frustrated home-buyers. It doesn’t have to be that way though.

Those of you that have researched the 203K have seen and heard the horror stories. On the message boards, in the forums and from Real Estate Agents and even mortgage lenders. FHA 203K loans are too difficult, too much paperwork, too slow and too expensive.

Guess what, they are right. They are all of those things if you choose the wrong Loan Officer, the wrong HUD Consultant or the wrong Contractor. 203K loans are a specialty mortgage product, they require a SPECIALIST.

It’s Not the 203K Loan Product, It’s the 203K Loan OFFICER

I understand the bad rap that 203K loans get. I get between 5 – 10 calls a week from frustrated home-buyers working with the wrong loan officer, the wrong lender, the wrong consultant or the wrong contractor. For most of them it’s too late, I can give some advice, but I can’t save them or rescue their closing.

They didn’t do their research. They entered blindly into one of the largest transactions of their life. It’s not all the customers fault, many of them trusted their agent to get them to the right loan officer or that their loan officer was qualified.

I’ll probably ruffle some feathers, but 80%+ of agents and loan officers are not qualified to handle even a basic transaction, let alone a renovation loan. So how do you avoid the 80% and choose wisely? Research.

Choosing Your 203K Loan Officer

I think this is obvious, but clearly you start with Google. Educate yourself on the product FIRST. If you haven’t done the research then how will you know if you loan officer is answering your questions correctly?

As you peruse Google, Bing or Yahoo for 203K info you’ll see at a lot of the same folks showing up. These are you experts. They may not be in your area, but they can probably guide you to a 203K expert that is. Of course, the best bet is to find a national 203k lender (like myself) that can help nationwide so you know that you have a loan officer that can execute the renovation mortgage process.

Don’t forget about LinkedIN or Facebook Fan Page search, both will guide you to 203K experts, who is recommending them and their accomplishments.

Finally, you need to interview the candidates. They should, without hesitation, be able to answer some basic questions. Here are a few of the most important.

  1. What’s the Difference Between the 203K Streamline and the Consultant 203K?
  2. How Many Renovation Loans Have You Closed?
  3. How Are the Draws Disbursed?
  4. What Additional Fees Does the 203K Have?
  5. How Long to Close?
  6. Do You Offer ALL the Renovation Mortgage Products (HomeStyle, HomePath, EEM, Jumbo)
If they hesitate on any of those questions then you do not have a 203K specialist. Finally, if they offer up anything longer than 45 days to close then keep looking. There’s NO reason a 203K loan should take longer than 45 days assuming YOU hold up your end of the bargain and get your contractor bids in a timely manner.

 

FHA 203K loans are an amazing product. They will absolutely give you the best value on a home purchase. Don’t assume that anyone can execute one though, do your research.

 

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