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Renovation Mortgage Process Step #2

Renovation Mortgage Process: Contractor Selection Stage

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Contractor Selection,

Scope of Work, and Final Bid

Welcome to the next step in the renovation mortgage process!

  • Determine how many Contractor quotes you would like to obtain. (Do not delay too long during this step on Purchase & Renovate loan as remember you are on the clock and under contract.)
  • A detailed Renovation Bid including a breakout of all labor and materials cost for each line item must be provided, and define what is required to meet your “wants” list and any minimum required property standards per inspection results such as Safety, Health, or non-active utilities, etc.
  • This detail provides an opportunity for the Customer, Contractor, and/or HUD Consultant to all understand and agree on the final scope of the work plan.
  • The greater the bid detail & inspection phase; the smoother the Appraisal and Lender Property Approval process will be.
  • Detailed inspections and bids also help show that all health and safety issues have been addressed upfront which helps the appraiser provide as clean a report as possible along with valuation.
  • Detailed inspections and bids documents that allocated funds for renovations are sufficient to cover the required work the property needs at a minimum.
  • Make your final Contractor selection if you have not already and make plans for the final agreed Bid to be sent to your lender as quickly as possible for review and appraisal order.

Mortgage Loan Process

Step 1: Documentation

Step 2: Contractor Selection

Step 3: Renovation Inspections

Step 4: Appraisal

Step 5: Underwriting

Step 6: Conditional Approval

Step 7: Clear To Close

Step 8: Closing

Step 9: Renovation Work Begins

Please feel free to contact us at any time if you have any questions about your loan status or the next steps in the process.

Make sure your Contractor understands what program is being used and how they will be paid by that program after the loan closes. This is very important in preventing delays late in the loan process due to Contractor confusion or misunderstanding. In addition, it can help prevent issues after loan closing with timely completion of the Renovation phase. Especially important conversation for the programs that require the Contractor be paid via draw payments

Contractor and Customer Responsibilities:

  • As soon as the Finalized Bid is submitted by an Approved Contractor the lender can review for appropriate detail & format and order the After Improved Appraisal. The Bid is required to be uploaded with Renovation Loan Appraisal orders to assist the appraiser in determining what is being done and what to base the After Value on.
  • Provide copies of contractor licensing, insurance, and other validation forms as required by the lender.
  • Early contractor validation is an important step to minimize delays in the final Property approval and loan approval stage.

Ready to learn more?

Go back to see the previous stage in the process.

Learn about the next step in the mortgage process.