Could you turn a house that you like into a home that you’ll love? A home renovation loan may be the tool that you need to do just that. Learning about loans for home renovation can allow you expand your list of possibilities when searching for the right home to buy. Understanding how these loans work can also come in handy if you already own a home that could benefit from a few tweaks.
Loans for Home Renovation
Fixer-uppers may need a little extra work, but they can offer significant benefits in return. Buying a fixer-upper reduces the likelihood of competition from other buyers, gives you a chance to get a home that is larger or in a better location than what you might otherwise be able to afford, provides an opportunity to create a customized home, and makes it easy to quickly build equity in the home by boosting the property’s value with a few wisely selected improvements (source). However, these advantages literally come at a cost. You must be able to pay for the materials and labor needed to complete the relevant home improvements. That’s where loans for home renovation come in handy.
What Can You Accomplish with a Renovation Loan?
Are you craving a bigger, brighter kitchen?
Is your bathroom in dire need of an update?
Would you like to gain additional living space by enclosing a porch, finishing your basement, or adding on to your house?
Has your roof reached the end of its life?
Are you hoping to decrease your energy bills by improving your HVAC system’s energy efficiency?
Do you need to improve your home’s accessibility and safety to account for a disability?
These are all things that you may be able to accomplish with a renovation loan. As Nerdwallet reports, requirements and restrictions for how the funds can be used vary from one loan program to another, so it’s important to match your plans with your financing.
Pros and Cons of Loans for Home Renovation
Like all loans, renovation loans have both pros and cons.
What makes a home renovation loan a smart choice? Using a renovation loan delivers both convenience and savings by allowing you to combine a mortgage and the funds needed for renovations into a single loan with one application, one set of closing costs, and one monthly payment. In addition, many of these programs allow you to borrow based on the expected value of your improved home, which gives you access to more funds. Rolling your borrowing for renovations into your mortgage may also allow you to secure a larger tax deduction (source).
What about renovation loans might make you hesitate? Because they are more complicated, these loans typically require more paperwork and more processing time.
Home Renovation Loan Possibilities
When it comes to home renovation loans, you have several loan programs to consider. PrimeLending of Wichita offers several different renovation loans to meet the varied needed of borrowers:
- The FHA 203k Renovation Loan program can be used to purchase or refinance a home that will be your primary residence and renovate it. Open to borrowers with lower credit scores, it allows you to borrow up to 110 percent of the improved value and features a low down payment requirement.
- The Fannie Mae HomeStyle Loan program offers loans at competitive interest rates to borrowers interested in making structural and cosmetic repairs to their primary residence, vacation home, or investment property.
- The Jumbo Renovation Financing program provides a way for borrowers who need home loans that exceed conventional limits to purchase a property and make improvements that are permanently attached and add value.
- PrimeLending’s Buyer/Seller Funded Repair Escrow program makes it possible for sales to progress without waiting for repairs or renovations to be completed by establishing an escrow account to cover the cost of the renovations.
When you’re searching for the ideal renovation loan for your needs, PrimeLending of Wichita is ready to help you find it. We deliver local expertise, personal attention, and straightforward guidance so that you can accomplish your housing goals confidently. Contact us today to learn how you can benefit from our services.