The current real estate market has limited inventory. It can be a challenge to find a home. However, if you’re looking for the perfect home, you may have an even more difficult time! A Home Renovation Mortgage may be the ideal solution to help you find a home that has perfect potential and turn it into your dream home.
With a Home Renovation Mortgage, you can purchase a home you could love but needs some updates or renovations to meet your needs. This type of loan allows you to combine the purchase price of a home with the cost of any renovations to that home, into a single loan.
Home Renovation Mortgage Scenarios
We’ve done home renovation mortgages for many different reasons! In one case, a family purchased a 3-bedroom home. The home was in good condition but didn’t have the number of rooms they needed. They decided to add on additional space with their renovation loan. They added an entire second-floor featuring additional bedrooms and a bathroom.
In another scenario, a couple purchased a structurally sound home that had an outdated interior. They used a renovation loan to remove a wall to open up the floor plan and installed a new roof. They also remodeled the kitchen and bathrooms and installed new flooring throughout the home.
The possibilities are endless with a Home Renovation Mortgage. Renovations can be as simple as replacing paint and carpet or fixing an HVAC system. Or, they can be as complex as adding square footage or completely remodeling kitchens and bathrooms. Use a renovation loan toward plumbing, electrical, roofing, siding, doors, windows, and much more.
Renovation Loan Process
The renovation loan process is similar to a standard mortgage process, with several exceptions. Once you find the property you are planning to purchase, you will need to find a contractor. This contractor is responsible for preparing the bids for your renovations. It’s important to note that with a renovation loan, the home buyer cannot do any of the work that is part of the renovation loan. A general contractor, or subcontractors working through the general contractor, must perform all work.
Next, the repair amount is combined with the purchase price of the home. On top of the purchase price and the repair bid, certain fees and additional contingency reserves are added to the total amount, depending on the loan program. This total amount determines the amount of your down payment (if required) and your total loan amount.
Some loan programs require the use of a HUD Consultant. A HUD Consultant is a project manager for the renovation project. They handle paperwork, conduct assessments and inspections of the property, and determine the loan fund distribution. If a HUD Consultant is required, you can finance their fees into the loan.
How to Get Started
A pre-approval is the first step in the home renovation loan process. There are many different renovation loan programs, each with different qualifying requirements. At KTL Performance Mortgage, we will review your loan application and let you know what programs will meet your needs.
Apply online! Or give us a call at 877-892-8222 and ask to speak to one of our home renovation loan experts!
