Before you apply for quick rehab loans, there are some things you should know. Some lenders are legitimate businessmen that offer solutions for the unique financing problems that real estate investors often encounter. Others... well, let's just say that others are not. It's pretty easy to tell the difference, once you know what to look for. Here's a little advice about how to quickly tell the good guys from the bad.
Whenever you are looking to borrow money, you have to use some caution. Even more caution is needed when you are looking for something like quick owner occupied rehab loans or other types of repair funding. You have to be careful, because there are companies both large and small that will try to take advantage of your need for speed. The first one's to avoid are the payday lenders.
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Despite pressures from non-profit organizations and the federal government, companies that offer personal loans guaranteed by your next paycheck are still in business. They advertise instant loans with no credit check and minimal paperwork. They may be able to come up with the money, but on the average they charge $10 per $100 borrowed. Since the loan has to be repaid within two weeks and is guaranteed by your post-dated check, their fees are equivalent to an interest rate of 261%. If you are unable to meet the due date, you will pay even more fees. If you are looking for quick rehab loans, you may run into their advertising, but you should keep looking.
Remember that when you are looking for quick owner occupied rehab loans, you are using your home as collateral. Sometimes, that's a good choice. Many commercial banks and other financial institutions offer home equity based loans at reasonable interest rates. There may even be tax advantages to this type of financing. On the other hand, if you borrow more than you can repay or if you choose a loan with a big balloon payment, you could lose your home.
According to the Federal Trade Commission, you should avoid lenders that encourage you to falsify information, take a larger amount than you need or accept higher monthly payments than you can afford. You should walk away from the desk, if any so-called loan officer suggests that you sign an agreement without first reading it.
Lenders that you can trust will be interested in your ability to repay. They will require information about your credit history, your employment history and your experience in real estate investing. They will want to know that you have some capital of your own to invest, that you are not relying on the value of your home or investment property to make the repairs that are needed. They will encourage you to read the fine print and go into detail about the payment plans that they offer.
There are great companies that specialize in quick rehab loans for smart investors, closing the deal in as little as two weeks. Make sure that you take the time to find one of them.
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