When you enter negotiations to purchase a home the blocks of preparation mentioned above are generally what you would need to have put in place or something to plan for as part of the transition prior to actually making a long term commitment at the lender's closing table. Once the appraisal report is completed you are well into the transaction whereas the only way out is if the appraised value that is less than your contract price, or if your mortgage application is declined by the lender for another reason.
If the home is appraised at less of a value than the agreed upon price, you are not required to complete the purchase, unless it is so stated in the contract; and if your mortgage is declined you cannot complete the purchase. In both cases however, you are entitle to a full refund of your down payment. You will not receive a refund of any part of the appraisal fee, and if your attorney charged a retainer fee that is probably not refundable either.
So you're ready to build your home purchase – your better home-purchase – in order to satisfy all your requirements in a home. Requirements that include major working components in the home working well after to closing takes place and your savings are depleted and there is no room for unforeseen breakdowns and emergency repairs. You need your home to be in top shape and you wanted to have a hand in making it so in order to eliminate the chance of unexpected outlay of cash which may have been set aside for other purposes.
Financing your home purchase with the FHA 203k rehabilitation loan keeps you, the buyer, involved with the purchase throughout the entire process. Unlike FHA 203b or conventional and PMI loan programs where you are not required to be at the property at the time of appraisal inspection or at any other time except the pre-closing walk-through, during the 203k process you must select the general contractor, as well as be present at the work inspection along with the HUD consultant and your contractor for the purpose of outlining what work you need done.
Once the transaction closes and work begins on your new home you are also continuously involved if the work is not too extensive, because you would have moved in; And if the repair work is such that it renders the home uninhabitable you must still maintain a presence in order to determine what kind of progress is being made as well as to collaborate with the contractor and the HUD consultant so that everyone is on the same page as to when you can take move into your home. When everything is said and done, you would have completed building your home-purchase in a manner that would serve you well for many years after closing.