Buying a home can be a tumultuous process, but it adds even more stress when you can’t find a home that’s perfect for you. Finding your dream home can take some time, and in today’s market it’s more important than ever to put an offer in when you find a home that could work for you. But what happens if you find a home that could be perfect, but it needs some fixing up? That’s where renovation loans come in. With one closing that includes purchase and renovation costs, they’re a wonderful option if you’re a person who wants a fixer-upper or you just can’t find a home that’s exactly right for you.
What is a renovation loan?
In short, a renovation loan is a mortgage program that allows you as a borrower to roll together your home and renovation costs. Essentially, you’re financing the cost of renovations into your purchase or refinance. This allows you to estimate what repairs and updates you want to make to your home while obtaining the funds to do them.
How can you use it?
Renovation loans can be used on a purchase or refinance. It works for purchases because it allows you to buy a less-than-ideal home and make changes to bring it up to your standards. For refinances, you can roll in renovation costs to make any necessary repairs or changes on your existing home that will make it last even longer. The best part about renovation loans is that you can finance for the “as-completed value,” meaning you can finance how much the house will be appraised for once the renovations are done. This is a great way to make improvements to your house, build value, and finance your home.
Why should I consider a renovation loan?
There are a few different reasons renovation loans are worth considering. The first is that the housing market today is incredibly fast-paced, with low inventory and high prices. Being ready to finance with a renovation loan allows you to open up options for homes you may not have considered if you were trying to buy a home that’s move-in ready.
If you’ve lived in your home for a long time, but you don’t necessarily want to move to modernize, renovation loans could be a wonderful plan to consider. Since you can refinance with a renovation loan, you can not only secure a lower rate or shorten your term, but also budget for things that will extend the life of the home you love so much already.
Another reason to consider a renovation loan is that the options are basically endless, no matter what changes you’re trying to make. You can use the funds from a renovation loan to make repairs, renovate, or even add an expansion to your home. Basically, the only thing you can’t do with a renovation loan is take your home down to the studs or demolish and rebuild.
When it comes to searching for your dream home, it’s important to make sure your new place fits your needs and feels comfortable. Renovation loans can help you open up options to create your dream home without having to build from the ground up. Ready to get the process started? Contact an experienced lender at Flat Branch Home Loans today.
