Lancaster PA Remodeling Tips & Tricks

July 15, 2013

“How much will my _______ remodel cost?”

Understand the pitfalls with “Ballpark Figures” in remodeling.

by Matt Blank


Curiosity led to some of the greatest discoveries mankind has known… and it also killed the beloved cat. Many Lancaster, PA homeowners have thought about remodeling projects for their home, finishing the basement, kitchen renovations, adding a bathroom or family room; but they rarely have any idea what the price tag will be. This isn’t a bad thing. Someone without construction experience rarely understands the remodeling process puzzle, and more importantly, how the pieces fit together: design, selections, demolition, framing, drywall, electrical, plumbing, inspections, etc, etc etc.

This leads to the inevitable question: “How much will my bathroom remodel cost?”. If not their bathroom, then remodeling their kitchen, finishing their basement, adding a room addition…

The difficulty with ballpark figures is the idea that a remodeling project is an item like a car or computer – one product sold by many vendors. Carpentry is a custom art, not just a skilled trade. A company may sell a new bathroom “system”, but that isn’t a custom renovation project.

Custom: No two projects or remodeling companies are the same. The design you choose and the selections you make will determine the cost of your project.

A general contractor may be able to give you an average price for similar jobs; unfortunately “average price” for all of their kitchens, etc, does not mean the same thing as the “ballpark figure” for your specific project. A price range is a reasonable request, just understand what those numbers mean.

Understanding “Ballpark Figure” Ranges:

-Low Price – You think this price is great! However, keep in min this is the bare bones, everything goes right price. Until we actually get in there and see what’s going on, we never really know what work will be involved. Beware when the actual proposal comes back and you are shocked to find the price higher than this.

Or worse, the contractor gives you a lowball “estimate” just to get the job, then you steadily watch the price rise. Learn the warning signs of these Horror Stories.

-High Price – This is usually for a higher end, more expensive selections and design. Beward that you are not scared off from the project before you even discuss what can be done within your budget.

Where to start:

Cost vs. Value for Harrisburg/Lancaster/York. This guide will help you begin to understand the average cost of several different project categories and how much you can expect to recoup in home value on your remodeling investment.

Click here for tips on how to find and interview experienced contractors.

About: Matt & Mike Blank of MBC Building & Remodeling, LLC have been making homes happy since 1999. We have hundreds of satisfied remodeling clients across Ephrata, Lititz, Landsiville, Millersville and everywhere else in Lancaster County.

Meet Mike Blank, CGR CAPS, President of MBC

 


June 24, 2013

Your Family Room Options

Families are much like “chills”… they’re multiplyin’! Having a common area to spend time with your loved ones, that’s important. We have helped many Lancaster County, PA families realize their dream space.

The first thing you must ask yourself about a family room is – where do we put it? When considering your home, you may wonder where the best spot is. Below we discuss your 3 main options:

Basement – For years, basements have been home to the family room area – a big TV and sound system to watch all the big games and blockbuster movies. You can practically double your livable square footage. Or, as MBC says, make your available space more livable.

Don’t Forget: You will need an egress window or door to the outside for fire escape, or be putting one in, to secure a building permit.

Addition – Family room additions come in many shapes and sizes; in-laws quarters added off the1st floor, build a 2nd story, or a family area above and garage below – you have many options to consider here. Your budget, your homes style and lot space will help determine the best choice for your situation.

Tip: Check our Addition Cost Calculator for some basic pricing ideas.

Lancaster PA Home Addition

Take down an interior wall – is there a pesky wall between the dining and living rooms? We often take down walls to open up space. A header board will need to be installed if any of the walls are load bearing. This will allow you more space to entertain and always be in the same room.

Design tip: light colors & mirrors help open up a room visually.

Home addition, in-laws quarters, basement or taking down walls? MBC Building & Remodeling, LLC can help you figure out is best for your situation! Contact us for a free consultation! Serving Lancaster County, PA, including Manheim, Millersville, Lancaster, Manheim Township, Lititz, Landisville, Lampeter and everywhere in between!

May 1, 2013

2013 Kitchen and Bath Remodel Design Trends from NKBA

By Matt Blank

What’s hot… and what’s not… in kitchen and bathroom design and remodeling for 2013?

From National Kitchen & Bath Association:

“As we settle into 2013 and a seemingly healthier national economy, some kitchen and bath design trends continue to flourish, while consumer budgets for these projects appear to have shrunk just a bit. To get specific —

* Gray color schemes in both kitchens and baths have witnessed a dramatic escalation since 2010, particularly over the past year. Used currently in 55% of kitchens and 56% of bathrooms, shades of gray are growing in appeal, creating chic, sophisticated spaces that many consumers desire.

* Also, continuing an important trend from last year, transitional-style kitchens and baths have clearly surpassed traditional styles, a longstanding favorite until 2012.

* While the use of quartz finishes was in slight decline last year, it has surfaced as a clear trendsetter this year, coming a close second to granite.

* Homeowner spending on their kitchen and bath remodels was trending upward a year ago, but the latest numbers tell a slightly less robust story. Heading into 2012, the total cost of the average kitchen and the average bath design was $51,050 and $18,575, respectively. As we move into 2013, the figures have dipped to $47,308 in kitchens, while staying steady at $18,538 in bathrooms.

Over 300 National Kitchen & Bath Association member-designers participated in the 2013 NKBA Design Trends Survey, reporting the materials, product types, and styles that they specified in their kitchen and bath designs over the final three months of 2012. While broad trends won’t be evident in every local market, the following are the top overall trends that emerged for kitchens and baths across the United States and Canada.”

General Kitchen & Bathroom Trends for 2013

  1. Shades of Grey
  2. Quartz Counters
  3. Trending “Transitional” Style (a seamless blend of traditional and contemporary)

2013 Kitchen Remodeling Trends

Kitchen Design and Remodeling by MBC Lancaster PA

  1. White Painted Cabinetry
  2. Glass Backsplash
  3. LED/Energy Efficient Lighting
  4. Touch-activated faucets
  5. Satin Nickel finish faucets on the rise

 

2013 Bathroom Remodeling Trends


  1. Ceramic/Porcelain tile flooring.
  2. Undermounted sinks remain the most requested in bathrooms.

Average Total Costs: No Growth

NKBA members did not see any increase in the average costs of their bathrooms and kitchens. Kitchens actually fell by .08% (around $3700 less than 2012). Bathrooms sunk even less – .017% (about $300 less than 2012). While no growth sounds like a bad thing, these numbers are up thousands of dollars from the bottom of 2011.

You can view and download the complete 2013 report here.

When you want to make your ideas a reality, call MBC Building & Remodeling, LLC in Lancaster County, PA for the Kitchen or Bathroom of your dreams!

March 19, 2013

Designing Your In-Laws Quarters Home Addition

Budget: A major step, and one of the first places you should start is developing an investment budget for the project. This isn’t always easy; without experience in these types of large home addition projects, you may have no idea what to expect. If you aren’t sure where to even begin, try our Addition Cost Calculator.

Style: Maintaining the style and aesthetics of your current home are very important when considering an addition. You do not want an eyesore stuck to your house just to cut costs – it is better to be patient and save so you can do it right the first time. Potential buyers will notice this right away… and will keep on moving.

2story_addition_mbclancasterpa

Create a Wish List to start: Bring ideas to the meeting. Involve your family members as much as possible in the interior designing, colors, flooring, bathroom fixtures and all of the other selections made during the design phase. This is a fun family activity, but also since they will be the one living there, their input is important. An experienced contractor can help you make the right choices to keep your budget intact while making sure of a win-win-win project design process.

Location: Should we go off the back? Add a 2nd story? What about a master suite and garage addition? Maybe we should do a garage conversion? You might have several options as to where to put the addition; or you may not. Working with an experience general contractor will give you some trusted guidance as to the pros and cons and feasibility of the different addition placement options you are considering.

Choosing Your General Contractor: Have they done the type of addition you are looking for? Putting a room on the back of a house is not the same as opening up the roof to add a second story. Always ask for work samples, state registration information and references. Check their website for evidence they have the quality and experience you desire.

From Lititz to Conestoga, Columbia to Manheim, MBC Building & Remodeling, LLC knows Lancaster County, PA home additions.

October 31, 2012

DROP THAT TOOLBOX!

DIY or OMG?

We spend a lot of time (and people spend a lot of money) fixing subpar remodeling work. You might be willing to do just about any home improvement project around your house… but before you tackle any major work, consider two things.

First, ask yourself if you can do the job right. Saving money is one thing, but are you knowledgeable enough about the task at hand to avoid major (and costly) mistakes?

Second—and perhaps more importantly—put yourself in the shoes of a potential buyer – even if you’re not likely to sell for years. You might be proud of all your home improvements, but that won’t stop the homebuyer from asking questions about the work. Fair or not, there is an inherent skepticism about homegrown handymen, no matter your talents.

Professionally done work, on the other hand, tends to have a certain “seal of approval” that assures the job was done properly. Plus, most pros guarantee their work for an extended time, which gives buyers even more confidence.

Can you get things done – or can you get things DONE RIGHT?

Just some food for thought!

September 7, 2012

Home Safety Tips for Seniors

*You should consider having a professional install/perform these Long Term Considerations.

    Bathroom

Free/Low-Cost Home Improvements
1. Set the hot-water heater to 120 degrees Fahrenheit to reduce energy costs and prevent scalding.
2. Mark cold and hot faucets clearly.
3. Leave a light on in your bathroom at night.
4. Use a rubber-suction bath mat or anti-slip floor strips or decals in the tub or shower.
5. Increase contrast: Avoid low contrasting items. Adding contrast is as simple as a blue tub mat in a white bathtub or painting the edge of the steps a contrasting color from the rest of the step surface.
6. Install a handheld adjustable showerhead for easier bathing.
7. Install user-friendly lever handle faucets in your sinks and in tubs or showers. Some faucets even
8. Skid-proof the tub and make sure the bath mat has a non-slip bottom.

Long Term Considerations*

1. Install a raised height toilet or sink/vanity.
2. Place a sturdy bathtub or shower seat in the tub and/or shower.
3. Mount grab bars next to the toilet and bathtub and in the shower for help getting up or down.

    Kitchen

Free/Low-Cost Home Improvements
1. Keep floors clean and uncluttered.
2. Illuminate work areas.
3. Mark “on” and “off” positions on appliances clearly and with bright colors.
4. Store heavier objects at waist level.
5. Place or mount an A-B-C rated, all-purpose fire extinguisher in an easily accessible location near the stove and oven so that you’re prepared for any type of kitchen fire.
6. Store sharp knives in a rack.

Long Term Considerations*

1. Replace knobs on cabinets and drawers with easy-to-grip, D-shaped handles.
2. Install offset hinges on all doors to add two inches of width for wheelchair access, if needed.
3. Install a security peephole on exterior doors at the correct height for you.
4. Install outdoor floodlights that switch on by motion sensors to light your way and to deter burglars.


    General

Free/Low-Cost Home Improvements
1. Open blinds and curtains and raise shades during daylight hours to increase natural light inside the home.
2. Place exposed electrical, telephone and computer cords along a wall where people won’t trip over them.
3. Remove all cords from under furniture or carpeting to lessen the risk of fire.
4. Remove clutter from stairways and passageways to help prevent trips and falls.
5. Check the carpeting on your stairs to be sure it is firmly attached.
6. Arrange furniture to allow for easy passage.
7. Create an emergency exit plan in case of a fire.
8. Remove debris from outdoor walkways.
9. Trim shrubbery to provide a clear view from doors and windows.
10. Increase light and decrease glare by using the highest-watt light bulbs or compact-fluorescent bulbs appropriate for your light fixtures or lamps. Use only non-glare incandescent bulbs (or the fluorescent equivalents).
11. Put nightlights in the bathroom and in hallways leading from the bedroom to the bathroom.
12. Keep a smoke detector on every floor and in each bedroom.
13. Make sure that all staircases have good lighting with switches at top and bottom.
14. Replace traditional light switches with easy-to-use, rocker-style light switches.
15. Install smoke and carbon-monoxide detectors on all levels of the house, especially where the bedrooms are.

Long Term Considerations*
1. Install railings on stairs, including basement stairs, and consider railings on both sides of the steps for an extra stability option.
2. Have a professional home evaluation to match your individual needs and habits.
3. Install a shelf at the main entrance door to hold items when locking and unlocking the door and install bigger, lever handles.

July 5, 2012

Lancaster County, PA Home Addition Calculator

Most of the Lancaster County, PA homeowners we talk to have no idea the cost of building some sort of home addition, like a sunroom, family room, master suite or garage. Now there are many different projects that fall under the addition category, and they aren’t just all the same cost of course. You should plan to invest anywhere from $20,000 to $200,000+ depending on the type of room addition project you and your family are planning.
Additions-Lancaster-PA
Now I’m sure you are saying, “That is a ridiculously big range… What about my sunroom?”… or mudroom, or garage, et al.

Answer? We created this Addition Investment Calculator for Lancaster County, PA to help you get a realistic idea of what you should plan on investing in your specific room addition project.

Major Investment Calculator Factors: To get a clearer idea of where your project may fall in the range below, you must consider a lot of different things. The following are just some of the factors that typically affect the cost of adding on to your home.

Size: The first major investment consideration is the square footage you envision on your project. No matter which project you are planning, bigger will always require a higher investment.

Exterior Finishes: The type of siding you choose plays an important role on the cost of your addition. Also, your door styles, roofing material, and any exterior lights you want will add to the bottom line.

Interior Finishes: Inside, there are a lot of ways to increase your position on the addition calculator below. What are we going to need? The type of flooring; total number and sizes of windows; trim work? If you are adding a kitchen, bathroom or other family area, you may need to choose cabinets, fixtures, countertops, tub material, paint and/or extra outlets.

Types of Additions:
Sunroom: $20,000 – 70,000+

Mudroom: $15,000 – 35,000+

Family Room: $50,000 – 70,000+

Bathroom Addition: $35,000 – 70,000+

Kitchen Addition: $35,000 – 100,000+

Garage w/ or w/o In Law Quarters upstairs: $50,000 – 140,000+
Additional garage building considerations: 1 story or 2? # of windows and entry doors? Number and style of garage doors? Finished drywall inside? In-laws quarters: bathroom and kitchen finish/appliance considerations?

Master Suite: $100,000 – 200,000+

2nd story: $150,000 – 200,000+

About this calculator:
• These estimated numbers are based on our long experience in the Lancaster County, PA remodeling field and Remodeling Magazine’s 2011-2012 Harrisburg, PA Cost vs. Value Report.
• All additions are structural buildings, meaning they require building permits, foundations must be dug and poured, Township inspections, etc.

These price ranges are very large, so contact us to get an exact quote on your Lancaster County, PA home addition! We can also help you with financing, design and floor plans.

May 31, 2012

Do you want a 4-season Sunroom or a 3-season Porch?

Sometimes while discussing a 4-season sunroom with our Lancaster County, PA clients, we get on the discussion of an alternative option: a 3-season room. Most of the time people were not aware of the term 3-season room or what it was, even though they usually have seen one after we explain it.

Here is a quick rundown of 4-season and 3-season rooms, their pros and cons and even an idea if you’re considering your own addition!

What is a 4-season room? A four-season room is a heated room addition. These are structures added to your home. The most common types are sunrooms and mudrooms. With a sunroom, you have large windows to let in the sun! A mudroom is usually a place of entry into the home, used for umbrellas, shoes and storage, or even a nice breakfast nook!

Additions-Lancaster-PA

These usually allow the perfect place to relax with your family during the beautiful sunny days, but no matter what the weather outside is doing you can enjoy these rooms 365 days a year.

Pros:
• Air-conditioned and heated for year round enjoyment.
• Enjoy the natural light. Sunrooms with a lot of windows give you an “outdoor” feeling with out leaving the AC!

Cons:
• This is a structure like your home, meaning it needs a foundation dug and footers laid. This adds to the cost of building the new room.

Ideas:
• Cover your whole sunroom roof with windows for a complete outdoor experience!

What is a 3-season room? A 3-season room is a windowed room that is not heated, therefore it is (usually) unusable in the cold winter months. They are however perfect for those cool nights of Spring and Fall, as well as being outside on a hot Summer day without the sun beating down on you and your family. You can either enclose an existing deck or porch, or build a completely new one.

Tip: When adding or enclosing a porch, use four-track windows for the best performance of the room.

Pros:
• Less expensive.
• Can take as little as a few days to complete an enclosure of an existing porch.

Cons:
• This room is usually not in use during the Winter months.

Ideas:
• Consider Sunspace four-track vinyl windows. They are custom, durable and affordable, so replacing the screens on your existing porch is a breeze.

I hope that covers it! If you have any questions or are ready for a sunroom or enclosed porch in Lancaster County, PA, please contact Mike Blank, CGR CAPS and MBC Building & Remodeling, LLC in Millersville!

April 24, 2012

Choosing a Top Deadbolt Lock for your Home

(This is a guest post from Madison Parker.)

One way to keep your home safe from would-be intruders is to install effective dead bolts on your doors. However, it’s important to look at what type of dead bolt to buy and what makes certain dead bolts even more effective – and discouraging to burglars – than others.

In general terms, as part of any basic security plan, homeowners should install what is known as Grade 1 or ANSI-designated deadbolt locks on every exterior door, including those between garages and home interiors. Burglars would of course prefer that you not use a deadbolt at all, and instead install an easy to pick spring lock. In fact, they’ll often avoid buildings with strong dead bolts in search of an easier target.

Since most area building codes do not require dead bolt type locks at all, the task of selecting an appropriate lock falls on the homeowner. Start your selection process by looking at a lock that’s a deterrent to burglars: one that can’t be picked, pried, hammered or drilled out easily. That means a lock that has an ANSI Grade 1 specification, which means the dead bolt has been tested to show that it can withstand up to ten hammer blows, and can effectively open and close two hundred and fifty thousand times, and project itself one inch into the door frame. Grade two dead bolts are also considered recommended for home use, but the grade one specification means it’s the sturdiest by far.

You should also look at what is called the UL or underwriters laboratories listing standards. The sturdiest locks have a UL listing of four hundred and thirty seven, meaning the lock meets the highest standards for security locking. And, once you’ve found an ANSI Grade 1, UL 437 lock, you’ll need to decide if you want a single or double cylinder lock. A double cylinder requires a key to operate even from the inside, which can make usage a bit more complex for your family. A single cylinder is the type of dead bolt most of us use, and it requires a key to lock and unlock from the outside, but operates with a twist of the wrist from the inside.

If your exterior door has a window in it, you may want a double cylinder, as an intruder could potentially break a window, reach inside, and simply turn the single cylinder lock. However, if there are no windows on your door, the added complication of using a double cylinder lock is probably not worth it. They can also be dangerous if you’re trying to exit your home quickly in the event of a fire or another emergency. In general, a single cylinder lock is strong and safe if you have a solid door.

Select your dead bolt lock by choosing one that features steel bolts or steel inserts with a one inch throw or more. What is a one inch throw? It’s the one inch of bolt that extends past your door’s edge, making it more difficult for an intruder to pick your lock.

Other facets to look for: a striking plate that’s steel with screws at least three inches in length.

Select a leading brand such as Master Lock, Schlage, or Baldwin.

Some Examples:

  • Schlage B60 609 Grade 1 Single Cylinder Deadbolt or the Kwikset 99800-092 Signatures 980 Grade 1 Security Single Cylinder SmartKey with a customized security system that allows easy re-keying if a key is lost.
  • Medeco Maxum 11WC60L, one of the toughest out there.

Electronic keyless deadbolts

When selecting an electronic model be sure to find one that prevents lock bumping which is one way dead bolts can be broken. The Sunnect AP501AB and the Schlage BE365VCAM619 Camelot Deadbolt Keypad are both excellent keyless dead bolt models.

Madison Parker is a security expert whose interests range from personal to home security systems. Get more tips and advice on her Home Security blog!

January 30, 2012

FHA 203k Loan Info

Many Lancaster County, PA home buyers find themselves torn when they are about to decide on which house to buy. We often here from potential clients “I LOVE the location, but we NEED to do something about that bathroom”; or “If it only had a finished basement…”; or “a home addition would make this our DREAM home”.

Remodeling by MBC Lancaster PA

The Federal Housing Administration (FHA) offers a loan specifially for situations like the ones mentioned above – the 203k Rehab Loan. Here is some important answers and general info from the Housing and Urban Development’s website regarding eligibility, how to apply and all things 203k.

Program Overview

The purchase of a house that needs repair is often a catch-22 situation, because the bank won’t lend the money to buy the house until the repairs are complete, and the repairs can’t be done until the house has been purchased.

HUD’s 203(k) program can help you with this quagmire and allow you to purchase or refinance a property plus include in the loan the cost of making the repairs and improvements. The FHA insured 203(k) loan is provided through approved mortgage lenders nationwide. It is available to persons wanting to occupy the home.

The downpayment requirement for an owner-occupant (or a nonprofit organization or government agency) is approximately 3.5% of the acquisition and repair costs of the property.

For a list of lenders who are offering the 203(k) Rehabilitation Program, please see the 203(k) Lenders List. The interest rate and discount points on the loan are negotiable between the borrower and the lender.

Program Questions

What is the minimum amount of rehabilitation required for a non-streamlined Section 203(k) mortgage?

There is a minimum $5,000 requirement for the eligible improvements on the existing structure on the property. Minor or cosmetic repairs by themselves are unacceptable; however, they may be added to the minimum requirement. Under the Streamlined 203(k) program, a minimum repair/improvement cost requirement is not applicable.

What happens if the cost of the rehabilitation increases during the rehabilitation period?

Can the 203(k) mortgage amount be increased to cover the additional expenses? No. This emphasizes the importance of carefully selecting a contractor who will accurately estimate the cost of the improvements and satisfactorily complete the rehabilitation at or below the estimate.

Is there a time period on the rehabilitation construction period?

Yes, the Rehabilitation Loan Agreement contains three provisions concerning the timeliness of the work. The work must begin within 30 days of execution of the Agreement. The work must not cease prior to completion for more than 30 consecutive days. The work is to be completed within the time period shown in the Agreement (not to exceed six months); the lender should not allow a time period longer than that required to complete the work.

Does HUD always require a contingency reserve to cover unexpected cost increases?

Typically, yes. On properties older than 30 years and over $7,500 in rehabilitation costs, the cost estimate must include a contingency reserve. The reserve must be a minimum of ten (10) percent of the cost of rehabilitation; however, the contingency reserve may not exceed twenty (20) percent where major remodeling is contemplated. If utilities were not turned on for inspection, a minimum fifteen (15) percent is required.
Deck by MBC Lancaster County, PA

Eligible Improvements

Can a detached garage or another dwelling be placed on the mortgaged property?

Yes, under the Standard (k) program, however, a new addition must be attached to the existing dwelling, and must comply with HUD’s Minimum Property Standards in 24 CFR 200.926d and all local codes and ordinances.

Can a dwelling be converted to provide access for a disabled person?

Yes. A dwelling can be remodeled to improve the kitchen and bath to accommodate a wheelchair access. Wider doors and handicap ramps can also be included in the cost of rehabilitation.
2 story home addition by MBC in Lancaster County, PA.

Application Process

This describes a typical step-by-step application/mortgage origination process for a transaction involving the purchase and rehabilitation of a property. It explains the role of HUD, the mortgage lender, the contractor, the borrower, consultant, the plan reviewer, appraiser and the inspector.

A. Homebuyer Locates the Property.

B. Preliminary Feasibility Analysis. After the property is located, the homebuyer and their real estate professional should make a marketability analysis prior to signing the sales contract. The following should be determined:

1) The extent of the rehabilitation work required;

2) Rough cost estimate of the work; and

3) The expected market value of the property after completion of the work. Note: The borrower does not want to spend money for appraisals and repair specifications (plans), then discover that the value of the property will be less than the purchase price (or existing indebtedness), plus the cost of improvements.

C. Sales Contract is Executed. A provision should be included in the sales contract that the buyer has applied for Section 203(k) financing, and that the contract is contingent upon loan approval and buyer’s acceptance of additional required improvements as determined by HUD or the lender.

D. Homebuyer Selects Mortgage Lender. Call HUD Field Office for a list of lenders.

E. Consultant Prepares Work Write-up and Cost Estimate.

F. Lender Requests HUD Case Number. Upon acceptance of the architectural exhibits, the lender requests the assignment of a HUD case number, the plan reviewer, appraiser, and the inspector.

G. Fee Consultant Visits Property. The homebuyer and contractor (where applicable) meet with the fee consultant to ensure that the architectural exhibits are acceptable and that all program requirements have been properly shown on the exhibits.

H. Appraiser Performs the Appraisal.

I. Lender Reviews the Application The appraisal is reviewed to determine the maximum insurable mortgage amount for the property

J. Issuance of Conditional Commitment/Statement of Appraised Value. This is issued by the lender and establishes the maximum insurable mortgage amount for the property.

K. Lender Prepares Firm Commitment Application. The borrower provides information for the lender to request a credit report, verifications of employment and deposits, and any other source documents needed to establish the ability of the borrower to repay the mortgage.

L. Lender Issues Firm Commitment. If the application is found acceptable, the firm commitment is issued to the borrower. It states the maximum mortgage amount that HUD will insure for the borrower and the property.

M. Mortgage Loan Closing. After issuance of the firm commitment, the lender prepares for the closing of the mortgage. This includes the preparation of the Rehabilitation Loan Agreement. The Agreement is executed by the borrower and the lender in order to establish the conditions under which the lender will release funds from the Rehabilitation Escrow Account. Following closing, the borrower is required to begin making mortgage payments on the entire principal amount for the mortgage, including the amount in the Rehabilitation Escrow Account that has not yet been disbursed.

N. Mortgage Insurance Endorsement. Following loan closing, the lender submits copies of the mortgage documents to the HUD office for mortgage insurance endorsement. HUD reviews the submission and, if found acceptable, issues a Mortgage Insurance Certificate to the lender.

O. Rehabilitation Construction Begins. At loan closing, the mortgage proceeds will be disbursed to pay off the seller of the existing property and the Rehabilitation Escrow Account will be established. Construction may begin. The homeowner has up to six (6) months to complete the work depending on the extent of work to be completed. (Lenders may require less than six months.)

P. Releases from Rehabilitation Escrow Account. As construction progresses, funds are released after the work is inspected by a HUD-approved inspector. A maximum of four draw inspections plus a final inspection are allowed. The inspector reviews the Draw Request (form HUD-9746-A) that is prepared by the borrower and contractor. If the cost of rehabilitation exceeds $10,000, additional draw inspections are authorized provided the lender and borrower agree in writing and the number of draw inspections is shown on form HUD-92700, 203(k) Maximum Mortgage Worksheet.

Q. Completion of Work/Final Inspection. When all work is complete according to the approved architectural exhibits and change orders, the borrower provides a letter indicating that all work is satisfactorily complete and ready for final inspection. If the HUD-approved inspector agrees, the final draw may be released, minus the required 10 percent holdback. If there is unused contingency funds or mortgage payment reserves in the Account, the lender must apply the funds to prepay the mortgage principal.

Visit the HUD 203k FAQ page for more questions and answers.

If you’re looking for your own Lancaster County, PA contractor, look no further than MBC Building & Remodeling, LLC! Please, please, please contact us with any questions you have regarding home renovations, rehabs or 203k loans.

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