Are you looking to renovate current parts of your home or even add on an extension because your family is growing? Or are you thinking of purchasing a home that will need renovation? Three prominent reasons to make changes in a home include:
- Resale value. Any time you make improvements to your home, you are adding to your property’s overall appeal and value. It doesn’t matter if you don’t have plans to sell now. Taking care of this at opportune times can always ensure you are ready to go on the market.
- Improve your living space. The two most significant factors that are affected by a remodel are functionality and flow. How a person can navigate through a room controls the flow. Access is a must; you can control that more with simple touches or redesigns.
- Get up-to-date. This can be obvious or something that you may have to consider a bit. Design trends can come and go, so you’ll need to decide if you want the latest and greatest or if you’d go with something more timeless or classic.
Ready to get started? First, it’s time to secure a home renovation loan.
A home renovation loan is one of the most common ways to give homeowners access to funds needed to fix up their homes and make them more comfortable for their families to live in long-term. The good news is if you purchase a home knowing it’s a fixer-upper, a home renovation loan is combined with your mortgage to allow you to improve without having to manage more than one loan and eliminate unnecessary closing costs. Plus, you’ll get to stay in your current home and neighborhood while you go through the home remodel and customization process.
If you want to remodel your current home, you can still get a home renovation loan, but you’ll want to talk to your mortgage professional to make sure that is your best option. If you have built up some equity, you might consider a home equity loan. Refinancing is another possibility. Again, you don’t have to make this decision on your own! Your mortgage lender will be happy to help.
When you are ready to move ahead, follow these tips:
Have a credit score of 500 or above. Although it may vary by lender and state, this is a general rule of thumb when qualifying for an FHA 203k loan to have a credit score of 500 or above. Some lenders may be a bit higher so you may want to plan for that. If you’re not quite there yet, be sure to take the proper steps to increase your credit score, like paying off debts and making all payments on time. If you find any inaccuracies while studying your credit report, be sure to dispute those right away by calling your credit provider and gathering any evidence you have to support your dispute.
Have a down payment of 3.5%. Down payments vary depending on a variety of factors, but generally, you’ll need a 3.5% down payment if your credit score is 580 or higher and 10% if your credit score is between 500 to 579. If you haven’t quite hit this number for your down payment, you could try downsizing temporarily or looking into additional down payment assistance programs.
Diving into a home renovation isn’t just about choosing the right paint or fixtures—it’s about making smart financial choices. Enter your mortgage professional: they’ve got the savvy to guide you through the maze of loan options, finding you the perfect fit that aligns with your vision and budget. Think of them as your renovation teammate—they’ll have your back from the first swing of the hammer to the final reveal, ensuring your dream transformation doesn’t become a budgetary tightrope.
