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Finding Out About Financing

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.

Finding Out About Financing

Fix And Flip Financing – Are Rehab Loans The Right Choice For You?

by Colleen Porter

Rehab loans are attractive options for homeowners interested in updating their homes. But can these loans be instrumental for helping people interested in fixing and flipping properties as an investment? Here's what you need to know about rehab loans and whether these loans might be the perfect choice for your fix and flip financing needs.

What are Rehab Loans?

The attractiveness of rehab loans is that they allow homebuyers to purchase the money to purchase and renovate the home with a single mortgage. This means buyers won't have to finance repairs and renovations out of pocket or get approval for an additional loan to cover the costs. However, FHA rehab loans are only available for homeowners who plan to live in their homes and not those who plan to fix and flip their homes. They can be used for various projects, such as: making homes accessible for disabled and aging people, improving energy efficiency, or improving the functionality and attractiveness of the home. There are two types of FHA rehab loans. The 203(k) limited loan offers up to $35,000 for renovations but does not allow for structural repairs. The 203(k) standard loan provides for structural changes but requires homeowners to hire a HUD consultant to oversee the process.

Rehab Loans vs. Fix and Flip Credit Financing

The one huge benefit of rehab loans, if you intend to live in the home while renovating or once the renovations are complete is the fact that you're only taking out a single mortgage. However, many investors will need an alternative. That often comes in the form of fix and flip credit financing, a fix and flip credit line, or a bridge loan.  Fix and flip loans and lines of credit offer a few distinct advantages worth consideration, including the following:

  • Interest-only payment options (keeps the monthly payments down).
  • Flexible financing terms.
  • Fast approvals and disbursements.
  • Allows investors to protect other assets.
  • Approval is based on the value of the investment rather than the personal income of borrowers.

Of course, these benefits come with a few distinctive considerations, including short repayment terms and high-interest rates. Then there is the entire mortgage that remains as a separate loan.

Keep these things in mind when exploring options for rehab loans. Whether you're renovating a home to make it your dream home or hoping to help someone else find their dream home through your efforts, getting the right financing is an essential first step. For more information on rehab loans, contact a professional near you.