Whether you are looking to purchase a home that needs renovations or repairs or are refinancing an existing mortgage and looking to make home improvements, the Renovation Loan is an excellent home loan choice. The great feature about this renovation loan is that it is a single first mortgage, not an equity line of credit, construction loan, or second mortgage. The fact that the Renovation Loan is a single mortgage means there is only one closing thus saving you both time and money. First mortgage loans typically offer a lower interest rate than an equity line or a construction, which is an additional cost savings.
How Much Money Can You Borrow For the Renovation Loan?
Renovations, repairs, or improvements cannot exceed 50 percent of the “as-completed” value of the property with a first mortgage. The “as-completed” value is the market value of the home factoring in the improvements and renovations.
What Type of Repairs or Improvements Are Allowed?
The renovation loan can only be used toward any repairs or renovations that are permanently affixed to the property and also improve the value to the property.
Renovation Loan – FHA 203K Loan
203k Loan – FHA Section 203k insurance enables home buyers and homeowners to finance either (or both) the purchase and/or refinancing of their home including the cost of its repair and upgrades through an individual mortgage. It allows them to finance the repairs or upgrades of their existing homes.
The FHA 203k loan meets a very specific and crucial need for home buyers. When purchasing a home that needs some repair or modification, home buyers typically have to follow a complex and often prohibitively costly process. Loans required for this kind of home buyer usually have high interest rates, balloon payments, and short payment terms. That’s why the 203k loan is a perfect loan for rehab and improvement and is insured by the Federal Government.
FHA 203k Loan - Government Insured Can Be Used For:
Bathrooms and kitchen remodeling (including built-in appliances)
Replacing a roof, gutters, and downspouts
Adding a second story, a family room, another bath, etc.
Completing a basement or attic
Upgrading plumbing, heating, air conditioning or electrical service
Installing new siding, energy efficient windows and doors