Orange County, CA – I have written about home renovation loans in the past. Their popularity continues to increase. Some are taking advantage of the economic and real estate growth to build their own home. Others are turning something they like into something they love.
The range of programs that we offer are very broad and continue to expand. We recently added a one-time-close construction loan. With this program you don’t need two separate loans. That means only one transaction. Once the home is built, the loan will be converted to permanent financing, like a 30 Year Fixed loan. Best of all this saves you from paying two sets of closing costs. We also have a VA Renovation product. This loan gives our Veteran clients the ability to do major upgrades on a new or existing home. Since it’s a VA loan, it can be financed up to 100%. That means no down payment is required.
I was recently asked to discuss these in an article with Southern California Homes. Read the Southern California Homes Article here. I’ve also re-printed a copy below.
Can you briefly explain what a renovation loan is and how the loan can be used?
If they like it, now they will love it. That is how we like to refer to home renovation loans. Many homeowners purchase a property that fits most of their needs but in some cases, not all. A renovation loan allows them to add those finishing touches. A renovation loan is a home loan that combines the principal mortgage with additional funds needed, or wanted, to rehab or renovate a property. Renovations can be as minor as putting on a fresh coat of paint. Or they can be as extensive as adding new rooms.
Are there advantages of using a renovation loan program versus another type of loan or personal credit?
1. It preserves personal savings. Many homeowners pay cash for their renovations as they accumulate them.
2. All of the work can be done at one time, rather than bit by bit as you have the cash.
3. Interest rates are typically lower than personal credit cards.
4. Mortgage interest is tax deductible in most circumstances, whereas personal interest is not. (PrimeLending is not authorized to give tax advice. Please consult your tax professional for tax advice for your specific situation.)
5. Loans are available for purchases and refinances.
What are some of the most popular renovation loan programs and who are they best suited for?
Some of the most popular renovation programs are the VA Renovation loan, Homestyle Renovation loan, HomePath renovation loan and the FHA 203K renovation loan. We also offer a variety of smaller, rehab-specific escrow holdback programs as well as a Jumbo renovation loan. So, we really do have a program suited for most needs.
Is there anything different about applying and qualifying for a renovation loan compared with other home loans?
The main difference in qualifying for a renovation loan is that we need to evaluate the budget and feasibility of the renovations. This is the same if the upgrades are desired or required. The renovations must be permanent fixtures and they must add value to the property. Until now, renovation loans meant some hassle for clients and their contractors. Multiple, detailed estimates were required. Additionally, lots of paperwork and a thorough background check for the contractors was necessary. The good news is, times have changed. PrimeLending has streamlined the process. We made the renovation loan the perfect option for home repair financing.
Do you have any advice for someone in Southern California who recently bought a foreclosure that needs a lot of work?
Don’t be afraid of a renovation loan. Interest rates are still low. Therefore, renovation loans allow you to preserve cash with only a nominal increase in payment. This is why more people are choosing these loans to convert the house they like into a home they love.
We frequently get questions regarding our renovation and construction loans. We expect them and we’re happy to provide answers. Please contact me when you do. You can reach me at 949.973.0141.