Investing in a home is a major part of any one’s life. The thought that you are making, in most cases, a 30 year commitment to your lender is pretty intimidating. So if you are going to move and you have a budget to live within, why not maximize your buying potential to get exactly what you want? The answer is that a majority of homes for sale in the United States are old and in need of updates. Luckily a loan exists that allows to you make that old home-new. It is understandable how home buyers do not want another owners design, style and appeal to a house. It is challenging and in some cases a deterrent from making the purchase. In walks the Renovation Loan…
Most home buyers do not realize that they can purchase a home in a town they like, neighborhood they enjoy and property size that fits their liking AND design or renovate the home to their liking before they even move in. The popularity of the 203k loan product is increasing now more than ever and it is this type of loan that allows you to add the proposed improvements to the sales price thus increasing the value to the home before you even move in. The bank in turn will pay an approved contractor the amount of allocated draws to complete the work done that you have specified in the contract.
The true benefits of this are that home buyers can buy less than perfect homes in great locations and turn them into the home they envision, eliminate problems with the property right away and expand the home to meet their families needs. By financing these improvements into the initial loan, the home buyer can keep their savings in the bank and more importantly, not spend the next 5 years improving and repairing each room one at a time.
These loans come in fixed and adjustable rates just like any other home mortgage, they just allow for improvements to be financed into the loan at the time of purchase. Think for a moment, you can want to budget for a $300,000 home but find a home in a nearby neighborhood for $200,000 that is old, dated and in need of a lot of work. You can work with an approved contractor to add $100,000 worth of improvements that may include replacing electrical, HVAC, wells and septic tanks, siding, painting, landscaping, eliminate health hazards, kitchens, baths, decks and even installing new swimming pools. In this example, the home buyer now has the home of their dreams in the town or city they desired and they have still leveraged financing the same amount they would have if they purchases another home for $300,000, only having to face years of costly improvements to make the home likeable to their taste.
The Renovation Loan is available on residential properties (1-4 families), condos and manufactured housing and in some cases mixed use properties.