One benefit of buying a home in Boston is the beautiful older, or even historic, homes. However, in many instances, these older homes will need some renovation work before the new homeowner can move in. When homeowners want to purchase a fixer-upper, Rehab Loans in Boston MA can be a big help.
What is a Rehab Loan?
A rehab loan combines the cost of purchasing the home and the additional funds to renovate the property. Homeowners see benefits in rehab loans because those loans cover both the purchase price and renovation costs in one monthly payment. Additionally, by choosing a rehab loan over a traditional mortgage, homeowners are not scrambling to come up with the full renovation costs on their own at the beginning of the project. They are able to spread the costs over the length of their mortgage.
Rehab Loan Benefits
Because the FHA backs the most popular rehab loans, the qualifications can be more forgiving than a traditional mortgage. For example, a borrower’s credit history is still important, but it is not as critical in the application process. Additionally, many rehab loans require a significantly lower down payment than a more traditional mortgage.
Is There a Downside?
While rehab loans may seem like a no-brainer for home buyers, there are some cons to consider. Most rehab loans put a limit on the number of living units a structure may have to qualify, but single-family dwellings would be eligible. Rehab loans also place a limit on the types of upgrades allowable. For instance, improvements like building a swimming pool may be considered a luxury item and may not be permissible for rehab loan funds. Homeowners also need to consider that renovation costs can frequently be challenging to estimate. When choosing a rehab loan, be aware that if expenses exceed the funds provided by the loan, the home buyer will have to pay for those additional costs out of pocket.
A rehab loan may be an excellent option for home buyers looking to purchase a fixer-upper in a neighborhood they may not usually be able to afford, but not for those looking to buy a move-in ready home. To learn more about Rehab Loans in Boston MA, Browse the site or speak with a rehab loan representative.