Have you heard the term, "Rehab loan" referenced to a property and not fully understand what it means? Well here's a little information. Some of the homes out there need a little more than TLC. These homes may be foreclosures, short sales, or just homes that have had continuousdeferred maintenance over the years . These properties are perfect candidates for Rehab loans. The process can be a little more time consuming, but for the patient buyer, you are able to purchase a home that you like and make the updates it needs all with one closing. In general thesteps are:
- Meet with a Rehab Loan lender and get pre-approved. There are a few different programs out there, but a common one is the FHA 203K loan.,
- Selectyour home, write an offer and obtain quotes from a general contractor for the updates that you are interested in making. Of course different rehab loans have different guidelines on what can or must be updated and if there are any limits, so reviewing those details with your lender prior will be anecessity!
- The quotes will be submitted to your lender, and those estimates, along with the purchase price of the existing home, will be what the finished project needs to appraise for to obtain loan approval.
- Close on the home and then the work begins with an initial disbursement of the funds to cover the updates. Usually in just 1-2 monthstime, the work will be completed and the final disbursement is made to the contractor.