Some homes are move-in ready. The layout, the spacious kitchen, the backyard — they’re exactly what you’ve dreamt about. But what about the price tag? Oftentimes, those “perfect” homes come with a hefty sales price, and if that’s a situation you find yourself in, it may be time to consider buying a fixer upper, getting a renovation loan and creating your own dream home.
One of the perks of a fixer-upper is they’re often considerably more affordable than their modernized counterparts. Plus, you can customize every facet of the home to your liking. That’s why we want you to understand how a renovation loan works and show you how simple the process can be when working with renovation loan experts.
The Renovation Loan Process
Renovation financing differs from a traditional loan, as it has a few more steps. That makes sense because you’re changing the home before you move in. The biggest difference is that the cost of renovations will be included in the sales price of the home, so it’s important to know those details before getting too far into the process. Here’s how it works:
- Application: Quickly apply online to provide all the information we need to get you prequalified* and compare renovation loan options.
- Bid & Repairs: Once you’ve found a home, you can decide on the types of updates that your home needs and start collecting bids from contractors.
- Appraisal: The property will need to be appraised with all contractor bids submitted to the appraiser to ensure the property is assessed appropriately at its post-renovation value.
- Closing: At this point, all documents and bids are submitted, reviewed and processed in preparation for closing. If everything is approved, closing day is the final step before renovation work.
- Renovation Begins: After closing when your loan is funded, renovation work can begin. We will process all funds to the contractor as renovation work is completed on your home.
So what happens when renovations get underway?
- First Step: An email detailing the draw process and the Disbursement Analyst’s information will be sent within 48 hours of closing to you and the contractor.
- Documentation: All documents (like proof of permits, city requirements, etc.) are prepared so draws can be processed and released in a timely manner.
- Communication: Our Disbursement Analyst stays in contact with your contractor at every step, following up and checking in at each phase.
- Inspection: A third party will inspect the property and complete all progress inspections. We review the inspections and then proceed with disbursements as needed.
- Home: Both the borrower and contractor will complete and submit the final draw documents, including the Letter of Completion to the Disbursement Analyst for the final inspection and title.
The home you’ve always wanted is finally ready for you to move in. And don’t worry about managing multiple payments or loans since the cost of the renovation is included in the home’s sales price. That means you have just one loan and one monthly payment to go along with one beautiful home.
Want more information about renovation? Follow along the next few months as we cover so much more to get you prepared. We’re America’s Renovation Lender, and we have the experience and expertise to guide you through this important process. If you have any questions, please contact a local PrimeLending loan officer for more information.
*A prequalification is not an approval of credit and does not signify that underwriting requirements have been met.