Warm_in_NH
Minister of Fire
I bought my house on a 203k. It was a foreclosure, no kitchen, no heat, unknown septic and well, no flooring, etc....
I'm a contractor, all my banking is done through the local bank where I also got my loan. It was incredibly simple, but a lot of that was probably due to the fact that it's a small (2 branch) bank in a small town. They couldn't write a mortgage on a property with no heat, so this was their solution. I think I took one draw, did the rest out of pocket, the small bank was a breeze to work with on all of it.
I would really suggest making sure you have an establishment that you like. If you have a builder in mind don't be afraid to pick their brain as well. In my case there were no delays, I've been on jobs where we had to leave and come back because the bank inspector wasn't available to look at the job and release a draw, or there was a misunderstanding between the owner and the bank about draw release points, etc... All that just adds up to extra costs for the owner.
The only hang up was the bank required the purchase of points to initiate a loan (2009), there was a misunderstanding about how these points would transfer over to the mortgage when the loan was converted. Essentially, the bank had me pay something like $1500 in points to "initiate" the loan, which dropped the rate. I only held this loan for about 4 months. When taking out the mortgage, the points I bought on the 203 were tossed out the window, when they were supposed to be applied to the 30 yr loan!
Long and short, a few phone calls with some attorneys, a thorough review of the initial paperwork and bank policies. The common sense question of why would anyone buy points on a 4 month loan, and they adjusted the 30 yr rate to reflect the points that were required on the 203k.
Still a great bank, not sure if it was an intentionally shady move or due to the fact that the underwriter was / is an idiot, but they made good on it.
I'm a contractor, all my banking is done through the local bank where I also got my loan. It was incredibly simple, but a lot of that was probably due to the fact that it's a small (2 branch) bank in a small town. They couldn't write a mortgage on a property with no heat, so this was their solution. I think I took one draw, did the rest out of pocket, the small bank was a breeze to work with on all of it.
I would really suggest making sure you have an establishment that you like. If you have a builder in mind don't be afraid to pick their brain as well. In my case there were no delays, I've been on jobs where we had to leave and come back because the bank inspector wasn't available to look at the job and release a draw, or there was a misunderstanding between the owner and the bank about draw release points, etc... All that just adds up to extra costs for the owner.
The only hang up was the bank required the purchase of points to initiate a loan (2009), there was a misunderstanding about how these points would transfer over to the mortgage when the loan was converted. Essentially, the bank had me pay something like $1500 in points to "initiate" the loan, which dropped the rate. I only held this loan for about 4 months. When taking out the mortgage, the points I bought on the 203 were tossed out the window, when they were supposed to be applied to the 30 yr loan!
Long and short, a few phone calls with some attorneys, a thorough review of the initial paperwork and bank policies. The common sense question of why would anyone buy points on a 4 month loan, and they adjusted the 30 yr rate to reflect the points that were required on the 203k.
Still a great bank, not sure if it was an intentionally shady move or due to the fact that the underwriter was / is an idiot, but they made good on it.
