One question that commonly comes up when a buyer is attempting to purchase a home with a FHA 203k loan is whether a 203K inspection takes the place of a standard inspection. Simply put, it doesn’t. In order to better understand why it does not, it is important to first understand what each inspection entails.
A 203k loan program is essentially a rehab mortgage that gives a buyer the opportunity to purchase a home in need of repairs through a single loan. Previously, many buyers who were interested in these types of properties had to secure a standard mortgage and then obtain additional separate financing to cover the costs of the upgrades.
The Federal Housing Authority (FHA) insures these loans, which gives a buyer a great opportunity to obtain unrequired upgrades (i.e. remodeling their kitchen), as long as the home meets the minimum property standards set by the Housing and Urban Development (HUD).
When completing a 203K inspection, it is the consultant’s job to evaluate systems of the home and outline any saftety or structrual issues that will be required to be repaired. He will also review the quotes obtained from the contractor for the unnecessary upgrades to determine whether they seem reasonable and appropriate for the work being completed.
In this regard, the inspector is following the standards set by HUD and not the State Standards of Practice.
Standard Home Inspections:
When completing a standard inspection, our company abides by the Connecticut Home Inspector Standards of Practice. In this case, the inspector is working directly for the buyer to evaluate every system of the home.
The inspector will determine whether things appear to be unsafe, nonfunctional, or approaching the end of their service life as he walks through the property. He can then make recommendations for EVERY item that should be further evaluated or improved upon. As well, as items that should be monitored over time and/or budgeted to replace.
Although there is some overlap between the two inspections they are note interchangable. It is in most buyers’ best interests to have both inspections performed.
By completing a standard inspection first, the buyer gains valuable information about any potential repairs in the foreseeable future in addition to the immediate areas of concern. This way, they have the option to factor these items into the list of upgrades they request. A home inspection is going to provide a full picture of the property condition so that the buyer can make an educated decisiocn on if they want to move forward with the purchase of the home.
We have multiple inspectors that are certified HUD 203K consultants in addition to being full time home inspectors. To learn more about the 203k process or schedule one of our highly qualified inspectors as your consultant, call our office at (203)387-2131.