Rehab Loans 101:
So far, the verdict is still out!
Recently, I came across a home in a wonderful neighborhood that was listed for cash or rehab only. It sat for more than 2 weeks and I was so curious of why each time it popped up in my search. So, I decided to investigate more of what’s behind the mysterious rehab loan or alternatively known as a 203k. Once reading more about it, the Aries in me yelled out “Challenge Accepted” and two days later, my partner and I had an offer accepted! Dang ok! I guess we’re doing this.
The most surprising things that I have learned thus far.
You actually only need $5k in repairs to qualify it as a rehab loan. Sweet! That’s paint and refinishing the floors alone.
You need to have a contractor that you are hoping to work with identified IMMEDIATELY. This contractor should be SOLID and flexible. There is a pile of docs that the contractor needs to fill out. They are also required to have been in the industry for several years. So far our contractor is on it. I have promised him several 6 packs of beer once this rat race is over.
You get two appraisals. An initial appraisal and then another once repairs are completed.
You need more time to close than a traditional Conv or FHA loan. In addition to underwriting, you have a project team managing the construction part of the deal.
You need to be quick on your vision of repairs. We had about one week to have a concrete plan on what repairs where going to be completed, costs, and timeline.
I’m still in the process of it all………
