Fixing up a Property to Sell? Here are 3 Popular Rehab Loans
Are you thinking of fixing up a property this year to sell? You may need a rehab loan. So, what options are available for financing for those seeking rehab loans? The 3 most popular options for rehab loans are:
1.FHA 203k Rehab Loan
2.Home Equity Line of Credit or HELOC
3.Hard Money Rehab Loan
Unless you're a non-profit or you are looking to fix up the home you live in, you won't be eligible for an FHA 203k rehab loan. Real estate investors need not apply! And if you think you're getting a low cost loan by going FHA, think again. There's 0.55% ongoing for insurance, loan fees or points range from 2.75% to 4.75%, definitely count on an appraisal fee, ongoing inspection fees, and other junk fees.
HELOCs aren't available as readily as they used to be, in fact, most banks no longer offer equity lines of credit anymore. And for those banks that do offer HELOCs, most won't lend on investment properties. So unless you live in the property, forget about getting a HELOC if you're seeking a rehab loan for an investment property.
This leaves me with the last option: a hard money rehab loan. This option is by far the fastest and easiest loan to qualify for. Although the cost of a hard money rehab loan may be higher than a FHA 203k rehab loan or a HELOC, if you've got a need for speed, a hard money rehab loan is the only way to go. If you've never obtained a hard money rehab loan before, the requirements are less stringent than traditional loans. And if you do need a rehab loan in a hurry, take a minute to read a blog post we wrote recently on this topic called, 6 Items You Need to Close Your Rehab Loan Fast.
Posted by Corey Curwick Dutton
