Reply
Established Member
Posts: 17
Registered: ‎05-12-2012
0

Rehab Mortgage Loan?

So, my realtor is telling me that there is a loan offered called a rehab loan, for fixer upper houses. None of the loan officers that I have spoken to seem to offer this type of loan? Does anyone know a little more about this type of loan? I can't seem to get a lot of information about it, I found a few things online, but I'm still not exactly sure how it works??

Thanks in advance!!:smileywink:


Starting Score: 670
Current Score: 709
Goal Score: 800


Take the FICO Fitness Challenge

Regular Contributor
Posts: 169
Registered: ‎03-29-2012
0

Re: Rehab Mortgage Loan?

I was informed about this during my home buying process as well.  The name of the financing is a 203k loan.  I don't know how it works with conventional financing, but with FHA financing I was informed they allowed 30k above buying price if approved withinin normal lending guidelines.  The tricky part is, the house is reappraised after the rehab is complete(I believe they give you 6 months, someone correct me if I'm wrong).  If the house appraises for less than the amount of the loan with the 30k extra, you get to write them a big fat check to cover the difference.  So say the house is purchased at 100k, and you take out 130k to rehab it.  The house reappraises for 125k, you will then owe the lender 5k.  Hope this helps


Starting Score: EQ 619
Current Score: EQ 735, TU 732, EX 745(Lender Pulled)
Goal Score: EQ 700


Take the FICO Fitness Challenge
Community Leader
Super Contributor
Posts: 6,115
Registered: ‎03-06-2010
0

Re: Rehab Mortgage Loan?

^^^The poster above is correct - it's called an FHA 203k loan.  There may be other rehab loans but I don't know what they are called.

 

However, the process for a rehab loan is slightly different here - you can borrow more than $30k but the process is streamlined if the loan is under $30k. You need to use contractors (not handymen) to do the work and they have to provide their bids and their contracts in advance. So there is no overage because the lender will advance 50% up front for the contract to do the work after you close and the other 50% when everyone has completed the job AND the appraiser has gone back out to check the work to make sure it is completed. Use a lender that does a lot of these - because if you don't the process is a nightmare.

Established Member
Posts: 17
Registered: ‎05-12-2012
0

Re: Rehab Mortgage Loan?

Very helpful information.... Thank You!!


Starting Score: 670
Current Score: 709
Goal Score: 800


Take the FICO Fitness Challenge

Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on actual applicant approvals and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.