The prospect of applying for a home renovation loan can make even experienced real estate buyers and borrowers nervous.
The reason for this hesitation has little to do with the complexity or cost of a residential renovation loan — they’re usually both simple and affordable. For most would-be home renovators, the problem is that they simply aren’t familiar with this type of mortgage loan product.
And after all, it’s human nature to be a little afraid of the unknown.
Fortunately, the home lending experts at Veritas Funding have extensive experience in this area. For qualified buyers, we have a variety of home upgrade and renovation loans to choose from.
What Is a Home Renovation Loan?
The purpose of this type of mortgage loan is to help buyers purchase a home that requires work. But a home renovation loan may also work if you have upgrades you would like to make.
The most common loan programs for this purpose are the FHA 203(k) program and the 203(k) limited program. However, your mortgage lending expert may have other private home loan products that may also work for you.
What Are the Benefits of a Home Renovation Loan?
Home renovation loans provide several major benefits. In particular, these are the three biggest selling points for most borrowers:
You can finance your renovations — If you buy a home using a traditional mortgage loan, you’ll have to pay for your renovations out of pocket, which is difficult or impossible for most homeowners.
One loan, one close of escrow — Some home buyers arrange interim financing for repairs or renovations and then close on a traditional mortgage after the work is done. This means they’re paying double closing costs and fees — and enduring double the hassle.
Lower interest rate — Home renovation loans like the FHA 203(k) have a low, fixed interest rate. This translates into a lower monthly house payment
Depending on your goals and qualifications, your mortgage loan professional can help you select a renovation loan that provides the most relevant benefits for you.
How Hard Is it to Qualify for a Home Renovation Loan?
From an income and credit perspective, qualifying for a home remodeling or renovation loan is no more difficult than qualifying for other home loans. The biggest challenge, in this case, is the property you plan to purchase and the type of renovations you plan to perform.
Your mortgage lender can help you determine the best loan program for your needs and goals. The important fact to keep in mind is that not all renovations may be eligible under these programs. For example, the FHA 203(k) programs will not pay for outdoor luxuries like pools, spas or outdoor kitchens.
These programs will, however, apply to most energy-efficient upgrades such as upgraded insulation, dual-paned windows, and energy-efficient lighting.
If you’re interested in learning more about home loan programs to finance renovations, contact Veritas Funding. Located in Orem, Utah, we provide a wide variety of mortgage loan programs throughout Salt Lake City and along the Wasatch Front. When you’re ready to explore your options for home renovation loans, contact us to schedule a consultation.