With interest rates high and inventory low, competing to buy your dream home remains a challenge. Maybe you’ve considered focusing on a house that needs work but you’re worried you don’t have the cash to upgrade the home. The right lender can solve that problem for you. Stop thinking that investors are the only people that should entertain buying a fixer-upper! A renovation loan might be the answer for you. Renovation loans work a little differently than standard loans. Renovation loan lenders will require an appraisal of the property both in the condition in which it is being purchased, and on the “completed value” after work and upgrades. In order to make this loan work, you’ll need a bid and an agreement from a licensed contractor for the work that will be done. Your contractor will have 6 months to complete the work. These loans are only for cosmetic fixes only (new kitchen, bathrooms, flooring, windows, etc.) not structural improvements (add-ons, foundation work, etc.). If you’re approved for the loan, you can purchase the home and go ahead with your project. You won’t receive the entire sum up front, however. The funds to pay the contractor are set aside in an escrow account, and the lender will use them to pay the contractor directly. In this type of loan, the cost of the renovations or repairs is rolled into the loan that was used to finance the house. “Buy the worst home in the best neighborhood” is a familiar adage. A renovation loan may be just the way for you to do that! If you’re interested in more information about a loan like this, let me know and I will connect you with one of my trusted lenders.
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