If you happen to be a real estate investor or are familiar of the practices prevalent in the industry then you would have surely come across something called house flip loans. In today’s day and age, the business of house flipping is more popular than it ever was in the past with more and more entering the market because of one reason or the other.
More and more people are applying for house flip loans mainly because of the wide range of benefits that can be availed from the same. House flip loans are pretty easy to get and if you what you have read till now strikes your fancy then read on further to know more about house flip loans.
What exactly are house flip loans?
These loans are designee to help investors to purchase different purchases and then renovate it with a plan to selling it further at healthy profit margins. The house flip loans are mainly short-term loans and they can last anywhere between 6 months to 18 months. House flip loans are commonly availed by investors who intend to purchase properties at either auctions or at foreclosures.
These loans are different from construction loans in the sense that they aren’t used primarily for constructing new buildings from scratch but they instead used for renovations. One negative thing about house flip loans is that you might have to pay much higher interest rates on them in comparison to traditional home loans. But the good part is that the collateral of such loans is the property itself so you won’t be held liable personally if your plans of house flipping go haywire.
Top 3 benefits of house flip loans
These loans are being proactively applied by people and its mainly because of the wide range of benefits that can be availed from their usage. Read on further to know about them.
1. Much faster approval :- It takes very less time to get house flip loans sanctioned in comparison to traditional loans. This is mainly because of the reason that house flip loans are sanctioned by private lenders who don’t really have an extensive and exhaustive approval process like banks and credit unions. It is actually very easy and quick to apply for house flip loans. All you need to do is to reach out to a private lender and then present him with a plan describing how you aim to pay off the loan after the loan has been sanctioned to you.
If you have a solid plan then you have very good chances of getting the loan sanctioned because private lenders are a lot more interested in the project than in the person that they considering lending to. If everything is good on your side, then you can expect your loan to get sanctioned in just a couple of days. Some private lenders have a much more expedited process where they work with a much faster, seven-to-ten day closing period.
2. No penalties on pre-payment :- The negative thing about traditional loans is that you end up paying them off well before the maturation date then you might get penalized for the same. On the other hand, house flip loans don’t entail any kind of penalty at any stage. Thus, if you think that pre-payment penalties can actually end up eating into your profit margins, then you will be well served with house flip loans and you should apply for the same.
3. It’s a highly secured investment :- House flip loans are deemed to be a very secure investment because the house itself is the collateral in such loans. The worst that can happen is that if you aren’t able to turn a profit, then the lender will end up taking the possession of the home because the property is the collateral here and your personal assets have nothing to do with it.
The Bottom Line
Finding the right lender is crucial for getting such loans approved well within time and at good recent rates that aren’t exorbitant. Before beginning the search for the same through search engine queries you can ask for such lenders in your circles and consider contacting the names that have been forwarded to you as suggestions and recommendations. On top of that do your own research and you will be well on your way towards finding the best private lender that you contact for getting your house flip loans sanctioned.