What Is A Renovation Loan ?
A renovation loan is a personal loan for the purpose of financing renovations/repairs/improvements to one's home.
If one is buying a home, a purchase renovation or rehab loan covers the sales price of a home in addition to providing money for remodeling the home, a new roof, modernizing a kitchen, and installing new plumbing or electrical wiring/systems and many other kinds of improvements. This type of loan is ideal for those who want to start work on a house immediately following the purchase of an existing house. After closing on the house purchase and with one loan, the necessary funds are provided for both the purchase and renovation work.
If one owns one's home, a refinance renovation or home improvement loan - also known as a rehab loan - can refinance your existing mortgage loan balance plus provide additional money for home improvements, required repairs, and/or a new, additional room or floor to one's home. This type of loan is similar to the renovation loan for purchasing a home except, as mentioned, any existing property financing is paid off by this loan plus additional funds for renovations are provided.
Types Of Renovation Loans
In the USA, there are FHA (Federal Housing Administration) Renovation Loans:
An example of an FHA renovation loan is the FHA 203k or HomePath Renovation Loan which lends you money based on the completed value of your home. This contrasts with a mortgage loan which permits a loan based on the purchase price or current value of the home.
There are also Conventional Renovation Loans:
The Fannie Mae Homestyle program, otherwise known as the HomeStyle Renovation Mortgage is an example of a conventional renovation loan which allows you to both purchase a house and either repair it or improve it using a single loan. Like the Refinance Renovation Loan, you can also use this mortgage to refinance an existing mortgage as well as borrow money to make repairs or improvements to the house you currently own. This type of loan is available only to Fannie Mae-owned properties.
Which Type Of Renovation Loan Is Right For You?
Your credit, current equity or down payment, as well as your income and debts will determine which type of renovation loan is right for you.
What are the types of repairs I can do with a renovation loan?
Depending on which renovation loan you want to get, and provided you do not over-improve the home in your neighborhood, you can get financing for almost any type of repair work.
Renovation Loans And Loan Brokering
A loan broker is an intermediary between a borrower and a lender. He or she will contact lenders to negotiate the best interest rate and select the most favorable terms for the borrower. The loan broker will earn a fee based on the amount of the loan. With our high-income loan broker program, yo can get started as a loan broker in about 10 days.
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