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Why You Need a 203k Consultant Before You Buy a Fixer-Upper

Most homeowners are all too familiar with the ups and downs that routinely happen when searching for a home. You’ll never forget the thrill of finding the perfect dream home, or the heartbreak when someone else snatches it. If you’re looking for a fixer-upper, you might even discover a house (or many houses) with lots of potential, only to find you don’t have the necessary funding and labor professionals to pull the renovation off. That’s where a 203k loan consultant can help.

While a 203k loan consultant can’t stop another buyer from swooping in and stealing a deal, they can help you weigh your options so you know for sure when you find a good one--and connect you with the resources need to take the next step with confidence.


What Is a 203k Loan?

A 203k loan is an FHA loan that combines the purchase of a home with renovation costs into a single mortgage. Also referred to as a renovation loan, the 203k loan is available for home buyers as well as current homeowners interested in refinancing and renovating their existing home.


The 203k loan option eliminates the need to apply for multiple homes when either purchasing or refinancing a home that needs some TLC. However, getting approved for the FHA 203k loan and using it to purchase or refinance is just the beginning. Unless you possess all the necessary skills and licenses to do the renovations yourself, you’ll need to hire various contractors to complete the jobs. That’s where a 203k loan consultant will prove invaluable.


What Is a 203k Consultant?

There are specific FHA guidelines that must be followed with a 203k loan. A 203k consultant is well-versed in these requirements, and will make sure the homeowner completes and files all required paperwork and follows the right processes.


Why You Need a 203k Consultant

Even before any renovations begin, the property must be inspected. The home inspector will evaluate the house and provide a detailed report of existing and potential issues and safety hazards. In order to meet the 203k loan minimum property standards, there will be specific repairs required.

Fortunately, instead of hiring two different professionals for these tasks, Shield Guard Home Inspections can take care of both these tasks. Shield Guard has inspected more than 8500 homes, serving New York homeowners for more than 9 years, and also provides 203k Consulting Services.


A Shield Guard 203k consultant works on behalf of the homeowner, overseeing all aspects of the renovation projects, from beginning to end. From conducting the initial property inspection to managing the various contractor projects. This includes verifying the accuracy and pricing of estimates, ensuring the work is completed, building codes are met, and funds are properly disbursed.


Unfortunately, we’ve all heard of incidents where some contractors take advantage of homeowners, either through price gouging, cutting corners on projects, or even delays in completing a project altogether. Bottom line, the 203k consultant serves as the home owners advocate, working directly with the contractors and mortgage lender, handling much of the paperwork, and alleviating unnecessary stress.


Your consultant will keep you up to date during the entire process in regards to costs, timeframes, and so on so you can focus on what matters and keep your sanity.


What Exactly are the Duties of a 203k Consultant?

Regardless if you are familiar with renovation projects or not, the FHA requires a 203k Consultant on standard FHA 203k loans. The exception is on a limited 203k loan, which caps renovations at $35,000. However, because of the wide-range of duties involved in most renovation projects, hiring a 203k Consultant is strongly recommended.


Below is a list of 203k Consultant responsibilities:


  • Feasibility Study: Upon completion of the initial home inspection, the 203k consultant evaluates the cost of all repairs required to meet the HUD standards, in order to determine if the project is feasible from a financial standpoint.

  • Inspections: During a renovation project, a series of inspections are required. Besides the initial and final inspections, subsequent ones take place with individual projects to ensure HUD standards are met. Once approved funds are withdrawn and contractors paid. By choosing a 203k consultant who is also a licensed inspector will significantly streamline this process.

  • Architectural Drawings and Reports:Whenever architectural work is required, the consultant will either prepare the applicable documents or collaborate with a qualified contractor.

  • Project Details and Costs:The consultants are also responsible for preparing work plans and cost estimates for the contracted projects they are hired to do.The reports include details about the planned renovations, costs of labor, material, and other expenses.

  • Change Orders: In the event, renovation plans need to be altered during the course of a project, the consultant will create the change order documents explaining reasons for the changes.


All in all, finding a 203k loan consultant is a crucial step in buying a fixer-upper, but where do you begin? If finding a consultant sounds like just another step on your ever-growing to-do list, take a deep breath and reach out to our team. Shield Guard Home Inspections is proud to offer 203k loan consulting to help buyers make a wise decision before they purchase and stay on track with their loan program as renovations begin. Call us today to learn more!

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