203k Contractor Directory for Alabama

The 203k contractors in Alabama listed on this site have been approved to take care of your FHA 203(k) Loan needs, because they are experienced/knowledgeable with the 203k loan program and know the guidelines, necessary steps and recommended process required for your FHA 203(k) loan. All contractors listed in this directory have completed a 7-step approval process, which includes verification of references, suppliers, insurance, and licensing, in addition to education, testing and consultation -- all of which exceed any mortgage lender requirements. Because of this rigorous approval process, the contractors in this directory are allowed to label themselves as Approved 203k Contractors. Their Websites will contain the Approved 203k Contractor logo and you can also ask to see their Certificate of Approval. To learn more about the FHA 203(k) loan program, go to the FAQ page or for more detailed assistance, you may Contact Us.

TO GET STARTED
Use the links on the Contactor Search page to locate the experienced / knowledgeable 203k Contractors in the Alabama city where the property is located. You can also visit the nationwide 203k contractor directory located at 203kContractors.com™ to search for a 203k Contractor in all other states.

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PURCHASE AND REHAB YOUR HOME WITH AN FHA 203(k) LOAN

Most homebuyers are turned off at the sight or even the thought of a buying a fixer-upper. However, educated and informed homebuyers are utilizing the FHA 203(k) loan to buy their new home and fix it up with no additional out-of-pocket expense.

The FHA 203(k) loan is a tool that successful contractors, real estate and mortgage professionals have been using for many, many years. An FHA 203(k) loan is very similar to the traditional FHA loan (known as the FHA 203(b) loan). The only real difference is that with the FHA 203(k) loan, the homebuyer is adding money to their mortgage balance to finance any repair/improvement costs. Whereas the traditional FHA loan requires that certain repairs be done before the home is purchased, the FHA 203(k) loan allows the homebuyer to purchase their home and complete the repairs/improvements after the transaction closes. The other traditional FHA qualifications (appraisal guidelines, seasoning rules, etc.) still apply. But with the FHA 203(k) loan, a homebuyer can fix up his/her home and not have to worry about the additional out-of-pocket expenses for the repairs/improvements. What a brilliant way to purchase a fixer-upper!

There are two types of FHA 203(k) loans: the Standard (also known as the Full 203(k) or Rehab 203(k)) and the Streamline. The FHA 203(k) Rehab allows for structural modifications, additions, landscaping, architect and engineer contracting and requires, among others, a 203(k) Consultant. For the Rehab version, contractors are paid through a series of draws requested from the homeowner’s lender. This Rehab 203(k) it is not as common as the Streamline version. The FHA 203(k) Streamline is much more commonly used but will not allow for structural modifications, landscaping, etc., and has a maximum repair limit of $35,000. Contractors are paid in two payments – the first payment will be for materials/supplies, up to 50% of the cost of the job and the final payment is made to all contractors when all the work is 100% complete.

The FHA 203(k) loan is a great option for many reasons (just to name a few):

• Less competition to buy a home because fewer homebuyers want to purchase fixer-uppers
• Better opportunities for great financial deals on a home because of less interest in fixer-uppers
• Ability to fix up or add personal improvements to make a house into a home with no additional out-of-pocket expense

The FHA 203(k) loan also has potential drawbacks:

• No investor purchases; only owner occupant purchasers and qualified nonprofit groups allowed
• In a competing offer situation, it can be one of the weaker offers
• Additional contract contingency that may be undesirable to sellers
• Extra time involved with extended escrow periods, getting contractor bids, submitting additional paperwork to the lender, etc.
• Foreclosure property Asset Managers (sellers of REO’s) may not be familiar with the FHA 203k loan
• Potential challenge with finding qualified and experienced loan officers, real estate agents and contractors for the FHA 203(k) loan