As homeowners across the country spend more and more time at home, there’s been an explosion of home remolding. With the fall season arriving, you may also be feeling the need to change the look and feel of your space and a renovation loan may be a great way to get those changes done.
We’ll look into the three areas that have been getting the most attention from homeowners, then discuss what renovation loans are available to you.
Building an Accessory Dwelling Units (or ADUs)
In many parts of the country, the construction of Accessory Dwelling Units (or ADUs) has taken off in reaction to changing laws that make them easier and more cost-effective to construct. This was the case in California and it can be expected to continue with the remodeling boom now taking place. But, what is an ADU?
You’ve probably heard of names such as granny flats, in-law units or guest cottages. These all informal names for an ADU, which are small units on your property, typically between 500 to 1,000 sq. ft., that consist of a bedroom, bathroom, functioning kitchen and a living area.
They can be either attached or detached from the main home. This extra living space provides a great solution for situations such as:
- Elderly parents or adult children moving “back home”
- A crowded, multi-generational household
- The need for additional rental income
Adding Living Spaces to Your Property
Staying safe has meant staying at home for families across the nation. To avoid cabin fever, they’ve made efforts to spruce up their outdoor space so they can enjoy the being home, while outside of their house. These changes can include:
- Inground swimming pools/spas
- Large decks/patios
- Outdoor electric and plumbing
With the right upgrade, you can bring nature a little closer to home.
Giving Everyone the Space They Need
With every family member staying home more, and for longer, you may have noticed that space is now at a premium. An ADU may solve this problem by providing additional living area. If your property isn’t large enough for that option, however, or you own a condo, then you may want to look into adding an additional room.
For a house, this can mean extending the exterior to create that space.
For a condo, this can mean taking an existing room and creatively sectioning off an existing area for another unique purpose.
With the right renovation loan option, you can create:
- A home office
- An entertainment room
- An in-home gym
- A gourmet kitchen
- Additional bathrooms
The Right Loan for The Right Renovation
Not all renovation loans are built the same. To discover, which funding option makes sense for you and your family’s needs, it’s best to consult with a trusted Mortgage Loan Originator. In the broad strokes, you’ll have two options when it comes to funding your home upgrades and repairs: FHA 203(k) loans and Fannie Mae HomeStyle® loans.
1) FHA 203(k) loans are renovation loans backed by the federal government’s Federal Housing Administration (FHA). FHA 203(k) programs:
- Are only applicable to primary residences
- Focuses on repairs and fixes as opposed to “luxury” improvements
- Repairs have to be completed within a year
A noteworthy benefit of an FHA 203(k) loan is that their credit worthiness requirements are flexible. The FHA loan program was established to help borrowers with less-than-perfect credit.
Homebridge has been ranked No. 1 in FHA 203(k) renovation lending by the Department of Housing and Urban Development three years in a row (2017, 2018 and 2019) and are fully capable of helping you take advantage of this lending solution.
2) Fannie Mae HomeStyle® loans are conventional loans that are backed by private lenders, not a federal government agency. This loan is technically capped at 80% of your finished home’s value.
This means that if your home is worth $250,000 now, but improvement will bump it up to $300,000, you can borrow up to 80% on $300,000 before the project has even begun.
Unlike FHA 203(k) loans, HomeStyle® loans allow you to fund luxury improvements, such as a pool. In addition, you can use a HomeStyle® loan to renovate an investment property as well as your primary residence.
The Season for Change. The Time to Renovate Your Home
The last few months have seen several changes that homeowners should be aware of. For one, there’s been sharp increase in housing prices that began a few years ago and looks to continue. This means an increase in the equity of your home. In addition, there has been a steep drop in mortgage interest rates since the beginning of the year.
Together they mean that renovation loans are more affordable than they been in a long time while also adding addition value to your home. Dreaming big and saving money at the same time is not possible when working with the right lender.
As one of the nation’s top renovations lender — Homebridge has been name the top FHA 203(k) lender by HUD in 2017, 2018 and 2019 — we understand how to deliver service that goes beyond your expectations. Our mission is to make your homeowner dreams a reality, and we will work with you to ensure that happens.
Contact us today and let’s get started crafting your dream home!