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What Are Rehab Construction Loans?


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TERMINOLOGY

Rehab construction loans are a type of mortgage loan that is commonly used with real estate investors. Here are the basics of rehab construction loans.

Rehab Construction Loans

A rehab construction loan is utilized to facilitate the rehabilitation of a property that is in disrepair. Real estate investors can use these loans to purchase and repair homes that are in bad shape. These loans make it very convenient for real estate investors to get involved in this type of project and successfully complete it. 

Terms

One of the big differences between these types of loans and traditional mortgage loans is that they have flexible terms. Most of the time, if you have this type of loan, you will not have to make a full mortgage payment during the loan period. Instead, you may be able to avoid making any payments or simply pay the interest that is accumulating on the loan instead. In order to secure this type of loan, you are going to need to agree to pay a higher rate of interest than you would with a traditional mortgage. However, the flexibility of the loan makes it very desirable even with the high interest.