Delaware FHA 203k Rehab Loan Selecting Contractors

Here are the guidelines you must follow when selecting a contractor to give a bid for the repair work:

CONTRACTORS AND REHABILITATION CRITERIA

1. Must use contractors to complete repairs/rehabilitation (unless borrower can demonstrate needed expertise/experience)

2. Use of contractors:

A. Borrower selects contractor

B. Contractors provide estimates for the work to be done, if applicable

C. The lender must review the contractor’s credentials verifying jurisdictional requirements for licensing, bonding & insurance are met (need copy of all these docs)

D. The cost estimate(s) must clearly state the nature and type of repair and the cost for completion of the work item

E. The lender will review the work plans and estimates with the borrower

F. The lender may require the mortgagor to provide additional cost estimates if necessary

3. Borrower(s) to complete work, Lender must document that:

A. The borrower has the necessary expertise and experience to complete the work in a satisfactory (workmanlike) manner (ie: borrower is a licensed plumber and will complete that portion of the work)

B. The work can be completed in a timely manner

C. An agreement is executed by the borrower and lender

D. The cost of labor is included in the repair/rehabilitation cost (in case the borrower is unable to complete the work and a contractor must be hired). The mortgagor may not be compensated for his/her labor.

E. Estimates of the repair/rehabilitation costs

F. The borrower has provided written estimates from the suppliers of the materials that the mortgagor will purchase

G. Cost plus or time and material contracts are prohibited

4. The Rehabilitation Construction Period begins when the mortgage loan is closed

If you would like to apply for a Delaware FHA 203k Rehab Loan, you can apply online here or please call me at 302-703-0727 or send an e-mail to DelawareMortgages@yahoo.com

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713