Rehab Loan?'s

If I get a rehab lon for $50k which includes rehab cost.TYPICALLY do the banks allow the owner to do the repairs?How do you actually get the rehab money?Do you have to physically go to the title co and say may I have $5k please?Is there a limit TYPICALLY on how many times you can draw?I heard they give you the money after the work is done? Isnt that kinda defeating the purpose of the loan to get working capital?

Are you looking for a lender? If so, let me know and I’ll put you in touch with a broker I use who will be able to answer all your questions.


No Im looking for an answer to the above ?but thanks.

Rehab loans can be quite complicated. There are two basic types with regards to the dispensing of the “working capital”. Namely, a lump sum and a draw loan. A lump sum loan is a purchase that most closely resembles a cash out refinance. This allows you to purchase the property, as well as have cash in hand for repairs. This type of loan will yield a higher interest rate and not all brokers are familiar with this type of product. The second, the draw loan, is typically done with 5 draws or wthdrawals of cash. The approved contractors work with the bank and understand that the work is to be completed prior to payment. Part of the loan finances a GC’s expense. The work is inspected by your GC prior to dispursement of funds. Be careful of balloon terms on these loans. Other factors to consider before deciding which type of financing is best suited for your needs include: hosue type (primary residence or investment); number of units, your FICO score and your income type (Stated, full doc., self-employed or salaried…) Hope this helps. Dr. Dawn

Most rehab lenders keep the money in an escrow account after your loan closes and then offer agreed upon draws to the builder/general contractor after each phase is built. In addition, there will be an inspection at each phase in order to release the draw.