A Fix and Flip Home Loan is a short-term financing option designed specifically for real estate investors who buy properties with the intention of renovating and selling them quickly for a profit. Unlike traditional mortgage loans, which are geared towards long-term homeownership, fix and flip loans are tailored to meet the unique needs of property flippers, providing them with the capital necessary to purchase and rehab properties efficiently.
Here’s how a Fix and Flip Home Loan typically works:
- Application and Approval:
Investors seeking a fix and flip loan start by applying through a lender (me), which could be a private lender, hard money lender, or specialized financial institution. The approval process is usually quicker than traditional mortgages, often focusing more on the property’s potential value after renovation (the ARV, or “After Repair Value”) than on the borrower’s credit score or income.
- Loan Structure:
Fix and flip loans are generally short-term, lasting between 6 to 18 months. The loan amount is often based on a percentage of the property’s purchase price and the estimated cost of renovations. Lenders might cover up to 90% of the purchase price and 100% of the renovation costs, but this can vary.
- Renovation Process:
Once the loan is secured, the investor purchases the property and begins renovations. Funds for renovations are often released in stages as work is completed, ensuring that the project stays on track.
- Repayment:
The loan is repaid once the property is sold, ideally for a profit. If the property doesn’t sell within the loan term, the investor may need to refinance or extend the loan.
A Fix and Flip Home Loan is a powerful tool for real estate investors, enabling them to quickly capitalize on market opportunities and generate significant returns.
Here is a link to some of the other types of home loans I finance as a Broker: Types of Loans
Contact me today to learn more:
Jeff Markell NMLS# 224196
Grandpa Mortgage – U.S. Air Force Veteran
Reverse Mortgages – Mortgage Broker In OC
(714) 614-4040
jeff@empirehomeloans.com
Empire Home Loans, Inc. NMLS# 1839243
Serving all of California
www.mortgagebrokerinoc.com
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