Learn about refinancing your existing mortgage for Renovations Through Refinance

Learn about refinancing your existing mortgage for Renovations Through Refinance

Learn about refinancing your existing mortgage for Renovations Through Refinance

USING HOME EQUITY TO RESOURCE RENOVATION

You may be able to refinance your existing mortgage and use the equity to get cash back to make home improvements. Equity is the amount of your home you’ve already paid for and can claim as your own. When you do a cash-out refinance, you replace your current loan with a larger loan and receive the difference. Refinancing into a renovation loan may also be a great way for you to achieve home improvements and repairs if you do not have the equity for a cash-out refinance.

The best use of cash-out refinancing is for home improvements that increase the value of your home.

Refinancing into a renovation loan may also be a great way for you to achieve home improvements and repairs if you do not have the equity for a cash-out refinance. The FHA 203k renovation loan can help you finance repairs, upgrades and renovations. It can cover simple repairs and structural upgrades. You can add bedrooms or bathrooms, expand a kitchen or dining room or even add a second story to the home!

OUR RENOVATION LOAN PRODUCTS MAKE IT HAPPEN

The FHA 203k renovation loan, our go-to product for this lending situation, can help you finance repairs, upgrades and renovations. It can cover simple repairs and structural upgrades. You can add bedrooms or bathrooms, expand a kitchen or dining room or even add a second story to the home!.

You can use the standard 203k when the home improvements exceed $35,000 or when you need to make structural repairs. A portion of the loan proceeds is used to pay off the existing mortgage in a refinance. The remaining funds are placed in an escrow account and released as rehabilitation is completed. You may also include up to six months of mortgage payments if the HUD consultant determines you need to be displaced from the home during the repairs.

You can refinance and remodel with the FHA 203k. The FHA 203k option is based on the future value of the home once the work you’re financing is completed. Once you begin the process, you cannot make changes midstream to your plan because it may impact your approval.

There are two types of 203k renovations loans that we offer:
Streamlined and Standard.

Streamline Loan

MINOR REPAIRS Costing LESS THAN $35k
  • Funds are released in draws, as needed
  • In most cases, the work has to be completed within 6-12 months of loan origination

EXAMPLES OF REPAIRS OR REPLACEMENTS
  • Roof, gutter and/or downspouts
  • HVAC
  • Plumbing
  • Electrical systems
  • Flooring
  • Minor renovations that involve structural work
  • Painting
  • Weatherizing
  • Replace septic and well
  • Accessibility for persons with disabilities
  • Window and door replacement

Standard Loan

Major REPAIRS Costing More THAN $35k
  • 50% of the funds are released at closing
  • The work has to be completed within 6-12 months of loan origination

EXAMPLES OF RENOVATIONS
  • Structural Alterations
  • Reconstruction
  • Room additions
  • Remodeling kitchens and bathrooms
  • Adding another story to the house
  • Termite damage repair
  • Finishing the attic or basement
  • Major landscaping
  • Tree removal
  • Repair of existing in-ground pool
  • All repairs covered under the streamlined loan

DON’T QUALIFY FOR AN FHA 203K? A HOMESTYLE RENOVATION LOAN MAY BE THE SOLUTION FOR YOU.

If you are not eligible for the FHA 203k, you may qualify for the Homestyle Renovation loan. It works similar to the 203k loan and allows you to refinance your existing loan so that you can have one mortgage that helps pay for renovations or repairs. The 230k and Homestyle are not home equity lines of credit. Both loans are first mortgages with the terms of a first mortgage.