503 342 - 1444 (OR) • 858 345 - 9299 (CA)

Fix and flip loans focus on financing a home you plan on flipping, i.e., renovating and selling. These unique financing options have become popular in the real estate market, particularly for investors who want specialized funding focused on their needs. Understanding why these loans are increasingly popular can help you decide if they’re the best option for your next house-flipping project.

1. Faster Approval Periods

This financing method typically has brief approval periods compared to other options. According to Fit Small Business, they usually close in a few weeks and have comparatively shorter repayment terms. That means you can more quickly buy and flip a home without worrying about a lengthy loan approval process.

2. Shorter Repayment Terms

As mentioned above, this lending option includes a shorter repayment period than traditional loans. Some may have terms of just two years, greatly decreasing your debt window. Even better, this financing method is designed for buying and flipping homes, meaning it’s not subject to certain penalties and fees.

3. No Prepayment Penalties

Fix and flip loans typically get repaid when you sell a home. As a result, lenders don’t apply prepayment penalties when you pay it off before your terms finish. That’s a significant benefit for house flippers because you don’t have to worry about losing some of your profit to frustrating prepayment fees and costs.

4. Flexible Interest Options

Traditional financing options apply varying interest rates that can greatly decrease how much money you make in a home sale. Fixing and flipping financing options don’t draw interest until the property sells. While you must maintain the property before it sells, this lack of interest payments makes fixing and flipping loans cheaper than traditional options.

5. Adjustable Mortgage Rates

Lastly, fix and flip financing lets you control the buyer’s mortgage rate. This benefit is significant because you can provide a fixed interest rate in the first year and adjust it in the second if the rates increase. As a result, you provide more long-term stability and can help the buyer through their early financing steps.

People interested in fix and flip loans can apply with multiple lenders to increase their chances of approval. Call us to learn more about this financing option. We can help gauge whether it fits your fixing and flipping scheme. It can also let you compare interest rates and repayment terms before you invest too heavily in a new home project.