Home Renovation Loans
Renovating a home is always a daunting experience, whether you're renovating a new home you haven't lived in yet or one you've lived in for years (or decades). This is scary for many reasons, for example, because repairs are always troublesome, no matter how good the craftsmen you hire are. But the most important and frightening part of home renovation is its cost. It is impossible to calculate it in advance, it will change depending on a thousand factors, and even if you have saved money for several years, it may not be enough.
Be that as it may, sometimes taking out a loan to repair a house is easier and more convenient than spending a few more years with old pipes. Or even without them if this is a new house.
Here are a few options for renovation loans.
FHA 203(k) is a government-backed loan that is available to people with not very high credit scores. This is a mortgage loan with a down payment included in the total loan amount.
FHA 203(k) loans are categorized into full and optimized options, and the type you need will depend on the condition of your property. For example, a full FHA 203(k) loan is for a primary residence that needs major or major repairs, while a Streamline loan is used to cover minor repairs totaling less than $35,000.
An EZ Conventional loan can be used with a mortgage. It is suitable for non-structural home renovations that will increase the home's value. It covers both repairs required by the appraiser and repairs selected by the borrower.
Jumbo Renovation is similar to the previous loan. However, it is used for more expensive homes that are not covered by other home renovation loans. Jumbo renovation loans are suitable for use on projects that the appraiser requires or for repairs that the borrower wants to make. Repairs should be non-structural and add value to the home.
USDA Rural Development Home Repair Loans
USDA Rural Development Home Repair Loans are designed to help homebuyers in rural areas secure comfortable and safe homes. This financial assistance can be used to cover new appliances, foundations, siding, roofing, windows, plumbing, electrical improvements, and other necessary health and safety upgrades. The program's eligibility depends on income (up to 50% of the median income in the area) and rural residence.
However, in addition to specialized loans, which are more suitable for the renovation of new homes, there are broader options to consider—for example, personal loans and home equity loans.
A personal loan is great for small repairs. However, large-scale renovations usually require a massive investment of money. Personal loans offer from $1,000 to $50,000, but people with a perfect credit history and a high income can get a lot to make monthly payments.
Home Equity Loan
A home equity loan can provide you with money for a big renovation. With it, you receive a lump sum equal to up to 80% of the market value of your home. So such a loan may well cover the large-scale costs of major repairs. But, most importantly, make sure you can make your loan payments or you could lose your renovated home, which is collateral for the loan.