Sometimes during your house hunting journey you come across a home that’s in a great location, is the right size, but could use some repairs. But how will you finance the renovations and the mortgage? That’s where a renovation loan can help you.
A renovation loan is a type of mortgage that rolls the cost of purchasing the home and the renovation costs into one loan. That means you’ll have just one loan with one monthly payment to buy that fixer-upper and turn it into your dream home.
Other uses for renovation loans don’t have to include purchasing a home. You could use a renovation loan to make cosmetic fixes to your current home, put in a pool, or get a repair escrow.
TYPES OF RENOVATION LOANS
There are various types of renovation loans to fit different types of projects. From purchasing and repairing a fixer-upper to making repairs to fall back in love with the home you already own, PrimeLending offers a renovation mortgage to help get the job done.
FHA 203K – Backed by the Federal Housing Administration (FHA), an FHA 203K loan can help keep renovation costs as low as possible whether you are purchasing or refinancing. An FHA renovation loan also offers lower down payment requirements and lower refinancing interest rates.
VA Renovation Loan – Backed by the Department of Veterans Affairs (VA), a VA can help active and retired military members make home repairs and even completely remodel their home. Whether you’re purchasing a fixer-upper or renovating your current home, veterans could expect benefits like no down payment*, no private mortgage insurance and more.
Fannie Mae Homestyle® Loan and Freddie Mac CHOICERenovation MortgagesSM – Other government-backed renovation loans are the Homestyle® Loan and CHOICERenovation MortgagesSM from Fannie Mae and Freddie Mac, respectively. These loans help you make interior or exterior upgrades, put in a new fence, install new landscaping and more!
Repair Escrow – A repair escrow can help you make the changes you want to your home. Like a traditional escrow, a repair escrow account is set up and managed by your lender to help you pay for the repairs to your property.
EZ “C”onventional – Could your home use a modern upgrade? Did the appraiser or buyer request repairs? An EZ “C”onventional Repair Escrow or EZ “C” can make it simple to finance small upgrades. Non-structural repairs could be made to your kitchen, bathroom or bedroom improvement and must add value to the home.
Pool Escrow – Do you wish you had your own pool when the summer heat hits each year? A pool escrow can help conventional and jumbo loan borrowers set aside funds to cover the costs of pool construction which will be rolled into the mortgage, so you only have one monthly payment.
BENEFITS OF RENOVATION LOANS
While renovation loans can streamline your monthly payment, there are also other benefits to getting a reno mortgage. Some of these benefits include:
- Increasing Home Value – Making repairs to your home like updating the kitchen or adding a new roof could add value to your home. If this is the case, you may stand to get a return on your investment should you sell in the future.
- Preserve Savings – Rather than dipping into your savings to finance your home reno project, a renovation loan can help you pay for the project costs over a longer period of time so that you might keep your savings intact.
- Energy Efficiency – Searching for ways to save on your energy costs? You can use a renovation loan to made energy-efficient updates to your home which save you in the long run.
If you’re considering a renovation loan, talking to a mortgage professional can help you understand all of your financing options. Connect with your local PrimeLending loan expert today to get started.
*Certain restrictions apply. Not available in all areas. Please contact your PrimeLending loan officer for more details.
