We get A LOT questions that come in all the time and we try to answer as many of them as we can in blog posts so future customers will be able to see these posts and potentially have their questions answered up front.
One of our most recent questions was from a client in New Hampshire. The customer had a project where he was looking to put on an addition, which would require footers to be dug into the ground and, in order to do so, you obviously need to get into the ground. In New Hampshire during this time of year- you know, November, December, January- there is snow. Right now, they have already seen 21 inches of snow in New Hampshire. Now that doesn’t mean that the ground is frozen, since all of the snow has melted, so there is that potential to get into the ground. The biggest question that came in was…“Can we do a FHA 203k in the winter time when we’re starting the project in New Hampshire?”…because in a situation like this, the rule is that we need to finish the project within six months.
Yes, we do want every project to fit within the FHA 203k guideline of six months. However, we’re not going to hold up a project either by trying to blame the weatherman, because, at the end of the day, neither myself nor my underwriter- nor our investors- know what the weather is going to hold.
We could end up having a really warm winter and the ground may never freeze, so we could really hold up a loan for that reason? Again, six months really takes us to the point where even if we had to start in April with the ground starting to thaw, we would just start it then have to rush the job. This is an extremely important reason why we talk to the contractors and make sure the expectations are set because, if we don’t set expectations correctly, obviously there’s going to be issues.
Another question that I always get asked by customers is whether the six month condition from the FHA is hard and fast? The truth is I have had jobs that have extended past six months. It’s important to realize that FHA does not find it favorable for a loan to extend past six months. The FHA does frown upon it and they look to us, as the lender, as to why it is taking longer.
There are just certain things we can’t predict. We cannot predict weather. If there is a tornado in the area and it shuts down the job for two weeks because there’s no power, it is what it is. There’s nothing we can do, so FHA understands this and they’re willing to make concessions. If a contractor is not voluntarily doing the work, then that is a problem. In this scenario, they would come back to us and ask why we haven’t taken the time to make sure we vetted that contractor correctly to know whether or not he could handle the job. It really is a case-by-case scenario, but the rule is that we are supposed to get all of the FHA 203k ‘s done within the six-month period.