The contractors you use must also provide correct proof of insurance. This means liability, workers` compensation and/or property damage insurance. This ends up protecting the lender as well as himself. For example, if a subcontractor was injured on the job, they could follow you as the owner for the cost of their medical bills and lost wages if the right insurance doesn`t exist. Another example occurs when the contractor makes a mistake during the transformation process and causes damage to your property. If he doesn`t have insurance, you`d be responsible for any damage that could prevent the work from ending, which jeopardizes the 203K loan. Lenders need at least liability and workers` compensation insurance to protect all parties involved. After examination, the selected contractor must agree in writing to complete the work at the level of the estimate and within the time allowed. They do not make any decisions as to which repairs to carry out or not. If the borrower has a good understanding of what is needed, the advisor can be consulted after the contractor has made offers. The free advice is sometimes worth exactly what you pay.
Buying a 203K contractor may seem like a long process, but it`s worth it in the end. There are many contractors who defy and exploit ignorant owners. However, lenders that offer 203K loans won`t allow it, which is why they are so strict with the whole process and require the five points above before allowing someone to do the work on your home with a 203K loan. The mortgage borrower must provide the expert with information on the proposed remediation or improvement, as well as on all cost estimates, in order to estimate a better value a posteriori. Filed Under: FHA 203k Guidelines Tagged With: 203k Consultant, 203k Contractor, FHA 203k In addition to helping a borrower find a contractor, a good advisor will also check the forms that the borrower will need to sign at the end, including:. . .