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Rehab Loan

What are rehab loans?

A rehab loan, also known as a renovation loan, is a type of loan used to finance the purchase and renovation of a property. It is a good option for someone who wants to buy a fixer-upper or an older property in need of repairs and upgrades, as it allows them to combine the cost of the purchase and the renovation into one loan. Rehab loans typically offer flexible terms and may include various options for financing the renovation, making it a convenient and cost-effective way to finance a home renovation project.

Why choose a rehab loan

  • Funds for renovation: Rehab loans provide borrowers with funds specifically for the purpose of renovating a property, which can improve its value and livability.
  • Single loan for purchase and renovation: With a rehab loan, borrowers can finance both the purchase of a property and its renovation costs into a single loan, simplifying the financing process.
  • No separate renovation costs: With a rehab loan, there’s no need for the borrower to secure separate financing for the renovation, reducing the hassle and costs of securing additional financing.
  • Increased property value: By renovating a property with a rehab loan, the borrower can increase the property’s value and potentially improve their return on investment.
  • Easy process: Rehab loans are often streamlined, making it easier for borrowers to obtain financing for their renovation project.

The VA also offers a similar option for military and veterans to purchase a home and finance the required renovations to bring it up to standards set by the VA.

How rehab loans work

  • Eligibility: To be eligible for a rehab loan, the property must typically meet certain conditions, such as being a single-family residence or a multi-unit property.
  • Application: Borrowers must complete a loan application and provide documentation of their income, assets, and debts, as well as the planned renovation project.
  • Loan Approval: After the loan application is submitted, the lender will review the application and make a decision on loan approval.
  • Funds release: If the loan is approved, the funds will be released in stages, typically as the renovation work is completed.
  • Repayment: Rehab loans have a fixed or adjustable interest rate and a repayment term of typically 15 or 30 years. Borrowers make monthly payments to the lender, which go towards paying off both the principal and interest on the loan.

Interested in a Rehab Loan?

Contact us! One of our mortgage specialists would be happy to answer all your questions and get you started with a great low rate today!

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© 2024 Cornerstone First Mortgage, LLC. All Rights Reserved. NMLS ID #173855 Equal Opportunity Lender.

© 2023 Cornerstone First Mortgage, All Rights Reserved. NMLS ID #173855 Equal Opportunity Lender.