Home rehab loans allow investors to acquire homes in need of renovation at a low purchase price through quickly-accessed financing. These loans have more flexible terms than those imposed by traditional long-term mortgage loans, and are much easier and quicker to procure.
Rehab loans are sometimes referred to as rehab private money financing and rehab hard money financing.
What is Rehab Financing?
Qualifying for an FHA loan from traditional lending sources can be difficult; real estate investors looking for quick rehab loans must often use hard money lenders to procure the financing they need in a timely manner. For new home flippers, hard money rehab loans can be an ideal method of financing.
These short-term loans can provide a great deal of flexibility, and enable borrowers to get started on acquiring a property and beginning the renovation property almost immediately.
Hard Money Rehab Loans Versus Traditional Lending
Rehab loans are ideal for borrowers who need to secure money quickly, as it generally takes under a few weeks to get approved and receive the capital requested, whereas traditional lenders can drag the process out for one to three months. While traditional lending sources charge lower interest rates, it’s much more difficult to procure a rehab loan.
Conventional lenders don’t typically provide rehab loans to borrowers looking to flip a home; if the loan is approved, the borrower must have excellent credit and generally must show previous success in similar ventures.
The Terms of a Hard Money Rehab Loan
Hard money rehab loans are generally based on the current value of the property or the After Repair Value. Typically, San Diego hard money lenders will provide up to 65 percent of the home’s After Repair Value, but some private lenders choose to loan on the current value to reduce risk.
The loan-to-value ratios can vary based on the rehab lender and the needs of the borrower. Generally, these ratios range between 65 to 80 percent of the value of the property. Rehab loans require the borrower to have their own equity invested through the collateral of the property itself.
Usually, borrowers must have a decent credit score, a debt-to-income ratio under 35 percent, and must have no recent foreclosures or bankruptcies to their name. The interest rates can range from 8 to 16 percent, along with fees ranging from 1 to 5 percent of the sale price of the home, which are due to the lender at closing.
SD Equity Partners Rehab Loans
SD Equity Partners provides rehab loans to borrowers seeking to purchase a property that does not qualify for a traditional form of financing, like bank-provided mortgage loans.
Whether you’re a first-time home buyer or seasoned real estate investor, our financing programs will help you achieve your investment property objectives. With flexible terms, quick underwriting processes, and competitive interest rates, SD Equity Partners has provided our clients with numerous hard money rehab loans to help them secure the properties they need.
Searching for rehab loans in San Diego? SD Equity Partners is committed to helping real estate investors succeed. We provide thorough advice and support services to ensure your real estate investment is viable and achievable through renovation mortgage loans. Need quick financing to purchase and renovate a property investment in San Diego? We’re dedicated to contributing to the revitalization of communities by providing hardworking rehabbers with the renovation loan they need to secure real estate and begin their rehab efforts.
Whether you need a bridge loan to bridge the gap between your current home selling and investing in a new property, or you’re in search of rehab loans, SD Equity Partners can help you procure the right financing.