Homeowners Guide to Obtaining a Renovation Loan
Whether the home improvement project that you have long envisioned is big or small, vital or optional, you will always need money to support the job. And what better way to finance your little project than obtaining a good amount of renovation loan. This is one of the best solutions to fund a home and improve it.
If you love the location of your house, the neighborhood, and the overall vicinity but you need more rooms, try to consider going the renovation route before even bothering to sell the house. However, if you are drop-dead concerned about the total overhead and don't have enough money for the overall cost, then you should try acquiring a renovation loan.
A renovation loan is a secured loan that offers lower interest rates than any other type of loans. The amount of the money allowable for loan is determined upon the current valuation of your home. However, a renovation loan differs from other home improvement loans because the value of your house is computed based on its future market value after the renovations have been done.
A renovation loan is a subsidiary of the construction loans. One of its major advantages is that the lender will look at the finished product, and then decide the amount to be loaned. It is termed as the completed value rather than the commonly used denominator, current value. With other home loan programs, you are unlucky if you do not have enough properties that amount to the total cost of the renovation project. That's why if one is planning for a moderate to extensive type of home improvement, the renovation loan will always be the perfect choice.
A renovation loan has two major uses:
For purchasing a new house, that would need augmented renovation
The first money release is used to acquire the property prior to any construction processes. Once the property is bought, the construction begins. After the construction ends, another loan is released that is used for the second closing. This program allows you to finance your house mortgage as well as fund the improvements. You will only have one loan to pay, instead of having a separate loan for your mortgage and for your renovation loan.
For remodeling an existing property
This is the most common use of the renovation loan. The first disbursement finances any advances from the contractor or for any up front costs. While subsequent money releases are used for the modification and improvement processes.
