Contractor selection is one of the most important aspects of your California FHA 203K loan. Here are some helpful tips with things that you need to look for in the right FHA 203K contractor. A good contractor makes all the difference between a successful or unsuccessful FHA 203K renovation.
1.) Are They Properly Licensed & Insured? — To complete a FHA 203K renovation in California the contractor MUST be licensed by the state. You can verify their licensing via the Contractors State License Board website (http://www.cslb.ca.gov/Consumers/). If they aren’t listed then they need to be replaced. California has strict rules on contractor licensing. If contractors have not met these licensing guidelines, not only will your FHA 203K contractor have a tough time pulling permits, but your loan will not make it through underwriting in the first place. Don’t be fooled by tax certificates and county business licenses. For your FHA 203K loan these are not sufficient.2.) Do They Have References? — Check multiple references for contractors doing work for you. Find out what past customers have to say about the quality of the work along with how fast they completed it. Don't Skip This Step!!
3.) Do They Have a Line of Credit? — Are they familiar with the 203K? The reason you want FHA 203K contractors to have a line of credit is so they can begin work immediately after closing without having to wait for the first draw. Lenders will allow for 1/2 disbursements at close for upfront costs incurred by the contractors and the balance at completion. The easiest way to avoid any delays is to make sure they can start work immediately and can pay for it by using their line of credit.
*original article found HERE
