home | Frequently Asked Questions

Along the way, questions will arise.  Here are the most common questions we receive along with our best answers:

Q. What if the seller will not/cannot turn on the utilities?

A.  In this case, your contractor should do the best they can to test the utility with an unconventional method:

For Water Lines:  The best case is for the contractor to perform a pressure test to see if the pipes will hold air.  If pressure holds, the pipes are good.  If it does not hold, they will need to inspect the system and estimate a budget for repairs.  Best to estimate more than enough so that the worst case is covered.

For Heating/Furnace/AC:  If the unit cannot be turned on/tested, then the contractor needs to add the cost of replacement (as a worst-case scenario) to your bid.  After closing, if the furnace/AC works or can be repaired vs. replaced, the unused funds can be applied to the principal balance of your loan. (If you need the new furnace – you’re covered.)

Electric: If the electric cannot be turned on, the contractor should do a careful visual inspection throughout the house.  (Better yet, connect a generator and test it)  For obvious issues with faulty/missing/exposed wiring or panel box issues, the contractor should add repair costs to the bid.

Septic Systems:  The common test for septic systems is the dye test.  You need the water on for this as they’ll run a couple thousand gallons through.   If water is off, you need a septic specialist with an alternative water source (ie: water buffalo).   An alternative is tapping into public sewage if that is an option.  Worst case, the cost of full septic system replacement needs to be included in your bid.

Q.   What are the contractor requirements?

A.    Each contractor goes through a validation process.  They must be a full-time, licensed and insured contractor registered with the state.  They cannot be a relative or your employer.

Q.  Can I be my own general contractor?

A.  Sorry….no. None of our programs allow clients to do their own work.

Q.   How many contractors can I use?

A.    We highly recommend using one general contractor that can handle anything that arises.  In some cases, you need a specialist (for example: well drilling, septic company, pest treatment).  In those cases it makes sense.   If you must use a 2nd or 3rd contractor, be prepared to manage some additional communication and paperwork.

Q.  How is my contractor paid?

A.  Contractors are paid through a draw process as work is completed.  Some programs allow for an initial draw to the contractor, others only provide funds as work is completed.  Once we determine what program you will be working with, we will make sure both you and your contractor understand the details of that particular draw process.

Q.  How long does the contractor have to complete the renovations?

A  Contractors have from 30 days for simple fixes to as long as 180 days after closing.

Q.  How long does a typical renovation loan take to close?

A.  The driving factor of how long it takes is your contractor’s bid.  If you have a quality bid at the time of application, we can order the appraisal immediately and we can typically close in about 45 days.   If you need a few weeks to have the bid put together, allow some extra time.

Q.  Can I get pre-approved for a renovation loan?

A.  Yes!  We can let you know the maximum amount you qualify for and what programs might be right for you! If you’d like to get pre-approved, contact us.

Q.  Can I pick my own contractor or do you have a required list?

A.  You can pick the contractor of your choice.  They need to be validated (insured, licensed and NOT a relative/employer). Here are our tips on selecting a contractor.

Q: Are there minimum/maximum loan amounts?

A: This depends on the product/project.  FHA single-family homes mortgages go up to $314,827 (including renovation budget) in most of the country/higher in some areas; Click here for current FHA Mortgage Limits.  Conventional/Fannie Mae Homestyle Loans go up to $484,350 for single-family homes, higher in some areas and for multi-family homes.  Click here for details.