Since March 2020, there has been a substantial upswell of home improvement projects. From simple improvements to complete remodeling, the home front has been getting a massive facelift. Enter, Renovation Loans. While designed to provide the needed funds to update or renovate your home, it’s a good rule of thumb to view Renovation Loans as a means to reduce your long-term costs or increase the value of your property. A third scenario for considering a Renovation Loan? If you’re interested in buying a home that is at a lower price point or “fixer-upper.”
Renovation Loans
What is a Renovation Loan?
Who is eligible?
Renovation Loans come in a number of “flavors,” including simple personal loans or government-sponsored loans, such as Freddie Mac’s CHOICERenovation loan, Fannie Mae’s Home Style renovation loan and FHA 203(k) refinance loans from the Federal Housing Administration. (The options available to you depend upon your credit score and the types of improvements you plan to make. For instance, FHA 203(k) loans limit the renovations that can be done, but also offer more lenient credit requirements.)
Features
One payment
While available in a number of loan types, a Renovation Loan can help eliminate paying two separate debts – improvement costs can become part of your new mortgage amount.
Rates are lower now
With rates being significantly lower, a Renovation Loan may allow you to borrow for home improvements without dramatically affecting your monthly mortgage payment.
Add value
While a Mortgage Loan can fund updates to offer more comfort, usability or even a decrease in your utility bills, they can also add value in your home… that’s a win, all the way around!
Who is eligible?
Renovation Loans come in a number of “flavors,” including simple personal loans or government-sponsored loans, such as Freddie Mac’s CHOICERenovation loan, Fannie Mae’s Home Style renovation loan and FHA 203(k) refinance loans from the Federal Housing Administration. (The options available to you depend upon your credit score and the types of improvements you plan to make. For instance, FHA 203(k) loans limit the renovations that can be done, but also offer more lenient credit requirements.)
What other loan types are available?
When it comes to loans, you have many more options than you think. Find out about some here:
