203k Consultant – Common Questions | When taking out a loan to make repairs and improvements to a home, a borrower will have the option of the FHA 203k loan, which is commonly referred to as a rehab loan. With this loan, lenders require what is known as a 203k consultant to handle the HUD work write up and act as a project manager, overseeing the work and the draws for the project.
Here are answers to some common questions we’ve been asked at Beryl Engineering & Inspection:
1) Why do I need a 203k consultant?
Your lender most likely requires you to hire a certified 203k consultant to visit the home, make a list of the work to be done via a HUD form that the lender also requires and to facilitate with the draws. Having a certified consultant handle this for you and for your lender actually takes the work off both parties and holds the consultant responsible for overseeing completion of the work and ensuring the draws are requested correctly.
2) Who pays the consultant’s fee?
The borrower pays the consultant’s fee and this is typically paid up front once the agreement between the borrower and the consultant is signed. The fees are fixed nad mandated by HUD Handbook 4000.1.
3) Does the consultant choose a contractor for me or do I have to do this?
It is up to the borrower to select a contractor for the work to be completed, however; if you do not know any, your consultant can provide recommendations for the type of work you want completed. You, your consultant and your contractor will work closely together to ensure that the materials and the work performed are correct and will satisfy your lender.
4) Can I handle any of the work myself?
Your lender will require all of the work be performed by a licensed contractor. Draws are only paid to the contractor you select; no draws can be paid to you, the borrower.