So you’re planning on calling your traditional mortgage lender
to finance the property that you want to fix and flip. Please don’t call them yet- watch this video and see how you can save tons of money. I get it, I was shocked too when I found out that the financing process is totally different when it comes to flipping houses. Then I was overwhelmed.
Hi, I am Sherri Echols, Broker Associate with RE/MAX Bryan – College Station. Most traditional mortgage lenders don’t provide loans for fix and flip projects. It’s a ton of liability for their company because these homes generally have safety or health issues. They’d really love to lend money to you for a move-in ready home or a safe home that just needs some aesthetic updates. A house that’s in really bad shape AND ugly? Not so much.
So who can you call to gain access to funding if you don’t have the cash sitting in your account?! There’s a few options. Hard money lenders can help you at a cost because they’re willing to take on the risk of the home. They’re generally a group of people or an
individual who will help fund your project at a higher interest rate and a lower loan to value ratio.
They can close the transaction much faster than a bank which puts you in a better position when you’re offering to
purchase the property. These loans generally have repayment time limits on them before they start getting even more expensive.
But if you are working on a fix and flip project, you should be ok with that
because you want to finish your project as soon as possible- otherwise your holding costs are going to
start eating into your profit. I’m your Community Market Leader Sherri Echols, a helping hand for a happy home.
