Whether you’re buying a home that needs some repairs or you are already living in the property, there are different types of renovation loans and different financing options available to you. You don’t have to wait for several years or spend your savings on renovation projects — you can simply take out the money upfront by taking a renovation loan.
How do Renovation Loans Work?
There are different types and packages of renovation loans depending on your credit score, the scope of the work you intend to do, location, and the current state of your mortgage. The three main types of renovation loans include:
- For Good Credit Loan: this is also known as Fannie Mae HomeStyle. This type of loan allows you to structure your mortgage into a 15- or 30-year package and allows you to add your renovation project into your total loan. You need great credit for this type of loan. How much you can get depends on what the value of the home will be after renovation.
- For Not-So-Good Credit: Also known as FHA 203(k), this type of loan is government-backed and available for borrowers with low credit scores. It can be in the form of a full loan option or a streamlined option. Borrowers are required to pay additional upfront fees for this loan type.
- For Everyone Else: the EZ “Conventional loan is for pre-planned renovations that add value to your home. This includes both appraiser-required and borrower-desired renovations aimed at increasing the value of your home over time.
What Can You Use A Renovation Loan For
Renovation loans make it easier to carry out significant repairs on your home. It covers different types of home repairs and upgrades including kitchen and bathroom remodeling, home additions, room, floor replacement, and appliance upgrades.
Should I Get A Home Renovation Loan?
You should only consider getting a renovation loan if you are confident that such a project will reduce your long-term cost or increase the value of your home. Examples of such valuable repairs include attic and basement insulation, bathroom remodeling, and front door remodels. Repairs like this boost the value of your property and help you save more cost in the long run than the cost of the renovation itself. Since there are so many loan options you can consider for this type of loan, you should consider speaking to The My Home Mortgage Team to help you figure out the right plan for you.
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Testimonials
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Tammi was very patient and very helpful throughout the entire application process. Being a first-time home buyer I didn't know a lot of this which made me frustrated but I was able to get approved and now I am a homeowner thanks to Tammi!
— James C.
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Tammi Lewis made my home buying experience very easy. I felt no stress or pressure. Tammi was with me every step and made sure I understood everything with detailed talks. My credit score was low and Tammi advised me how to raise it. So that the Loan process would be approved with no problems. Any one know that wants to buy their first home I am recommending Tammi Lewis and First Home Mortgage.
— Charlie F.
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Rob made sure my experience as a first time home buyer was smooth and painless. Very professional and got things done in a timely manner. Could not have asked for more!
— Samantha J.
Great Experience for a New Homeowner
Rob was at all times, willing to go over the numerous pages of information with me. I am a new homeowner and had many as this was my first time navigating the home-buying waters. He explained things to me in a way that I understood and got me all of my documents in a timely and efficient manner. I enjoyed working with him and would refer him to anyone who is looking.
— Erica F.