203k Renovation Loan: Streamline vs. Standard

What’s the difference between the 203k Streamline and 203k Standard?

Let me back up 1 step first.  If you are wondering first before reading this post, what on earth is a 203k? check out my previous post How you can buy a diamond in the rough and make it your dream home.”  Trust me, you’ll be happy you happened upon this gem of a program if you are not familiar with it.  If you are a home buyer, this loan will help you. If you are homeowner, this loan will help you.  If you are Realtor, this loan will help you!

The Streamline 203k

The basic difference:  $35,000 in repair costs, and repairs non-structural in nature.

“Streamline” tends to give people an overall impression of faster, quicker, easier.  Truly, this is just not the case.  There are plenty of companies out there who will allow for a streamline to close without the use of a 203k consultant (we’ll talk about him/her later).  Sometimes this can even be pushed, because the lender will state it will be faster and save the borrower money.  Is that really true?  Yes and no.  Will it be faster?  Right now, for the sake of the transaction, yes it will.  But later on, while your poor customer is ready to throw themselves off their newly renovated roof because their job is taking double the amount of time and the contractor is adding dollar signs in left and right for “unforeseen circumstances”, no, it certainly will not.  The consultant is your friend.  He/she is there to make sure your project is properly funded, that you aren’t being ripped off, and that what you envision is how it comes out in the end.  Yes, there is a cost for the consultant’s report, known as the SOR (Specification of repairs).  So will you save money?  Sure, for now.

The Standard/Full 203k

Do it all, soup to nuts.

Once, I had a customer turn his rancher into a 2 story colonial, because he “simply just could NOT fit one more child into that house” (his words).  I had a young lady purchase an unlivable property (you don’t want to see those before photos) and completely gut and renovate every inch into her dream home.  I had a married couple who were heartbroken after their long time family home burned down – completely rebuild (their home, and their sanity).  Tell me about your dreams and visions of grandeur, you can do it.

This is going to be for larger projects, and anything structural.  In a streamline, the contractor is allowed only 2 draws.  For a standard 203k, the contractor may get up to 6 draws, depending on the complexity of the project.  The contractor must complete a section of work, and then may request an inspection and subsequent draw.  Remember your buddy, the 203k consultant?  He’s going to come out and complete the inspection.  He’s going to verify that the work is complete as specified in the SOR and that it is done in a workmanlike manner.  Not until that inspection is passed, will the contractor receive any funds.  The funds are disbursed by us as the lender, from your 203K escrow account.  So, we make sure the work is done right, and we write the checks for you.  Pretty nice, right?

Check out the differences between the Standard/Full 203k Structural Renovations and the Streamline 203k’s Non-Structural Renovations: