August 8, 2017
Rehab loans are great for taking a subpar home and fixing it for resale. These types of loans are easy and a useful way to obtain financing for a home which has a low purchase price and needs substantial amount of work. Here’s more on these types of loans and the process.
When do you need a Rehab Loan?
Rehab loans are unique in that they are loans based on the value of the home after repairs are completed. Normal mortgage loans which are used to buy homes assess the value of the home at its current state. If Maryland rehab loans were done in this matter then they would not be very large loans. As such, rehab lenders in Maryland will offer borrowers an amount based off of the value of the home or property once it is fixed up, also known as the “after repaired value”.
Commonly, rehab loans are used by investors who flip houses: people who purchase homes with the intent on fixing them up and selling fast at a profit. The benefit for the flipper is that they can get private/hard money fast and turn a quick profit on the home.
The Loan Process
At Maryland Private Mortgage, our process for getting a rehab loan is quite simple. Typically, we ask that borrowers go to the “Loan terms tab” to review our guidelines to obtain funding. Then complete the rehab loan application form online to get pre-qualified. Once approved, our usual turnaround closing time is 7-10 days.
What is “No-Doc” “Lite Doc Loan?
When going through the process of obtaining a rehab loan in Baltimore City, you may come across lenders who offer what is called a no-doc or doc-lite rehab loan. These loans are unique in that they require minimal to no income documentation from the borrower. In short, the collateral for the loan is the property you’re purchasing itself and not your income.
Why Partner with an Experienced Rehab Lender
When seeking out a rehab loan in Maryland, it’s crucial that you seek out a local lender with local investor experience. No two rehab loans are equal, and where some lenders may deny a borrower for whatever reason; an experienced rehab loan lender will make that deal work if possible. For this reason, it’s important to take the time to find a rehab lender who has been in the industry for a decades, knows what they are doing, and can mentor you in the process.
For more information on obtaining a rehab loan in Maryland, or if you have any questions about the rehab loan process, get in touch with the Baltimore rehab loan experts at Maryland Private Mortgage, today! We can be reached via phone at 410-661-8300 or click on the “Apply Now tab” to get pre-qualified.