When you start shopping for a car, you might be more concerned with additional features and specialty paint jobs than you are about the monthly bill. Unfortunately, the wrong financing can cost you dearly. Compound interest never sleeps, which means that you might be paying much more than you should if you work with the wrong lender. I want to help you to make great financial decisions, which is why I created this website. However, if you can remember a few tricks and keep those payments to a minimum, you can drive away with the car of your dreams without breaking the bank.
Are you in the process of buying a home that needs quite a bit of work, such as foreclosure or property that has just been neglected over the years? You may find that these homes come at a bargain price, but you'll have trouble getting a traditional mortgage to purchase them due to all of the problems. Thankfully, you can get a rehab loan to make your purchase and get the home into shape. Here are a few things to know about rehab loans before you move forward.
Know That You Can Roll Your Renovation Costs Into The Mortgage
What makes a rehab loan unique is that you can actually roll all of those costs associated to renovate your home into your mortgage. This gives you the ability to pay off that loan over the length of your mortgage at a much lower interest rate when compared to using a credit card or a traditional loan. This makes the renovation costs possible to those that do not have a lot of cash on hand to fix the home right away.
Know The Requirements of Rehab Loans
A rehab loan is considered an FHA product, so it has a lot of the same requirements as a normal FHA loan. This includes requirements for a down payment, credit score, and any other personal factors that go into determining if you can get a mortgage. Just know that the state of the house is taken into consideration with a rehab loan, and you won't be denied just because it needs some work.
Know What Repairs Are Covered With A Rehab Loan
A rehab loan cannot work for homes that have structural damage that needs to be repaired. This may be considered too risky for a rehab loan, and your loan will be denied. A rehab loan is ideal for any home that has cosmetic damage that needs to be fixed to instantly increase the home's value. There is also a limit to how much money can be put aside for repairs to be made. This amount varies from lender to lender, but if your repairs go beyond the maximum repair amount then you will have to repair the home out of your own pocket.
Know Who Can Do Repairs
If you think that you can do the repair on your own, know that you need to have a licensed and insured contractor in order to perform the repairs with your rehab money. You are not limited to using a specific contractor from a list, so it can be a friend or family member as long as they are licensed and insured.
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