A Note on Financing Rehab Costs

While you are financing rehab costs, most lenders categorize this differently from a pure "cash-out" refinance. Typically, these funds are placed in a rehab holdback or construction escrow account. The lender releases the funds in stages as work is completed. This is often viewed more favorably because the money is directly reinvested into the property, increasing its value and securing the lender's collateral.