WHETHER YOU ARE A FIRST-TIME REAL ESTATE INVESTOR OR A SEASONED PRO, CREATIVE HOME MORTGAGES CAN HELP FUND YOUR PROJECT
Real estate investors typically use flip loans to purchase a home, renovate it relatively inexpensively, and then sell it within a short time. Flip loans are also called “hard money” loans because they often originate with private lenders who do not follow conventional lending guidelines.
Borrowers are becoming more familiar with this type of financing due to television shows that chronicle investors and renovators “flipping” homes for profit. In reality, flip loans are a long-standing aspect of the mortgage market that target borrowers with specialized needs.
Count on Creative Home Mortgage to be your source for flip loans at competitive rates. Just as our brokers maintain an extensive network of lenders of government-backed and conventional loans, we also deal with reputable hard money lenders who understand the business of real estate investing.
Creative Home Mortgage can find the capital you require and expedite time-consuming paperwork so you can begin any project in a timely fashion. Our goal is to establish long-term relationships with our Sacramento Valley customers while helping them build wealth through real estate.
Fannie Mae and Freddie Mac, the government-sponsored entities that buy loans on the secondary mortgage market, do not deal in flip loans. For this reason the risk to lenders is greater and interest rates and fees on flip loans are generally higher than conventional loans.
Terms on flip loans are short. Borrowers may have from three months to a year to repay a flip loan, depending on the lender. In some cases, lenders require the loan to be paid off entirely at the end of the term instead of in monthly payments.
Closing costs for flip loans may also be slightly higher than conventional loans, but borrowers generally have cash in hand much sooner. That’s important for investors who wish to move quickly to purchase homes in foreclosure or through short sales.
Because homes purchased for resale are often in some state of disrepair or require updating, costs for property renovations are commonly included in flip loans. Government-backed FHA, USDA and VA loans are restricted to property purchases only.
The investment potential of a property plays a prominent role in the hard money process. In assessing a borrower’s application, lenders of flip loans review the value of a home, purchase price, and repairs that an investor plans on doing. This emphasis on the real estate itself means a less-than-ideal credit score is not necessarily an obstacle to being approved for flip loans.