A fix and flip loan is taken out by an investor. This loan is designed to help people purchase a property that they plan on renovating and selling in the future. These loans may be used to purchase a property that is already in foreclosure. Not only can these loans be used for renovation, but they can also be used for covering other expenses that people may incur from owning a property.
How Is This Loan Differerent From Regular Home Loans?
Fix and flip loans are typically taken out for six to 18 months. Traditional home loans are typically taken out for 15 to 30 years. The interest rate on a fix and flip loan is typically 12 to 18 percent. The interest rate on a regular home loan is usually two to four percent.
Furthermore, the property can be used as collateral for a fix and flip loan. Your credit score and income will determine your eligibility for a traditional home loan.
The Benefits of Getting Fix and Flip Loans
You will be able to quickly get funding if you are approved for one of these loans. It can take several weeks to process a home loan. Fix and flip loans can be processed in a matter of days.
The terms of these loans are also flexible. Many people who are unable to get traditional home loans qualify for these loans. Additionally, there is less risk associated with getting one of these loans. These loans are backed by property, so you will not lose your own home if you are unable to pay.