Step 1: The first step in the renovation process will be scheduling an appointment with a licensed consultant off of HUD’s consultant roster; they will help you determine the mandatory items that have to be done to get the home up to the minimum property standards for the appraisal and help you devise the scope of work for your wish-list items (the consultant is only required for the standard versions of the renovation loan programs).
Step 2: Get contractors out to the property to see the property and obtain bids from them on the list of mandatory and desired renovations.
Step 3: Select a contractor/bid and provide them to your loan officer and to your consultant.
Step 4: Your processor will reach out to the contractor to obtain the necessary documentation to ensure they meet the qualifications to do the work.
Step 5: Your consultant will revise his initial report to reflect the contractor’s figures and remove any desired items you have chosen to eliminate and/or add any additional desired and eligible repair items that were not on the initial list.
Step 6: Once you’ve decided the final scope of work that you want to include in the loan, the appraisal can be ordered, and that is done on an after-improved basis, taking into account the work that will be done to the home as part of the loan.
Step 7: Once you have provided all the necessary documentation and are pre-qualified for the loan, which is a percentage of the lesser of the acquisition cost (purchase price + renovations) or the after-improved appraised value, your loan can go to closing.