Brownsville Home Renovation Loans

Renovation loans are primarily used for restoring homes in dire need of repair, helping revitalize neighborhoods, and allowing buyers to purchase homes in more expensive areas at a lower cost.  

Homes requiring work are rarely listed at full value, allowing more room for negotiations. If you put in the time and patience, you can turn a fixer-upper into the home you’ve always wanted.

What is a Home Renovation Loan?

A home renovation loan is a loan that includes funds for renovating, remodeling, and repairing a home. It’s often a mortgage with extra money for home improvements.

You don’t necessarily have to live in the home already; some home renovation loans can be used to buy a fixer-upper and make upgrades immediately without needing to apply for separate financing.

What Are My Home Renovation Loan Options?

Renovation loans can significantly help homeowners or buyers who want to be more involved in building equity in their homes through home improvements.

These renovation home loan programs will allow you to get more bang for your buck when purchasing a home:

     1. Fannie Mae HomeStyle Renovation loan

Borrowers can use the Fannie Mae HomeStyle Renovation loan to either buy a home that needs repairs or refinance their current mortgage to get money for improvements.

The best thing about the HomeStyle loan is that it’s one loan with one monthly payment that can serve two purposes. You don’t have to take out a loan for the mortgage and another for the repairs. HomeStyle reduces your overall closing costs.

     2. FHA 203(k) loan

The FHA 203(k) loan is the government-backed version of the Fannie Mae HomeStyle Renovation loan. It enables the borrower to finance the purchase of a home and the renovations, all within a single mortgage loan. You can choose between two types of FHA 203(k) loans: the Limited 203(k), which is capped at $35,000, and the Standard 203(k), which is intended for large-scale construction or renovation projects.

The FHA 203(k) can be utilized to fund various home projects, as long as they are not luxury improvements like building a swimming pool or adding a backyard jacuzzi. Moreover, the loan is only for primary homes, not vacation or investment properties.

     3. Home Equity Line of Credit (HELOC) 

The home equity line of credit (HELOC) is a revolving credit line that can be drawn on as needed. HELOCs are similar to credit cards, allowing you to withdraw money anytime. You are also free to pay the balance gradually over time.

     4. Cash-Out Refinance

The cash-out mortgage is one of the most popular ways to fund home improvements. This type of home renovation loan allows you to refinance your home for more money than you currently owe on it and then draw the extra cash to pay for your home improvements. 

One of the most attractive features of a cash-out refinance loan is that it features a fixed interest rate, which can potentially reduce your interest rate or your monthly payments. Aside from conventional refinance loans offered by banks and lenders, the FHA and VA also have cash-out refinance loan programs. 

     5. Freddie Mac Choice Renovation Loan

Freddie Mac Choice Renovation loans allow borrowers to finance the purchase or refinancing of a home and make improvements to the property using a single loan.

This mortgage product allows you to borrow against the future value of your home, which, in comparison to a traditional home equity loan or line of credit, gives you a greater amount of borrowing power.

Which Home Renovation Loan is Right For You?

With so many different ways to finance a home renovation, the question now is: which one should you choose? As unsatisfying as this answer may be, the truth is that “it depends.” The most appropriate loan for your circumstances will depend on many factors, including your credit score, home equity, and the type of project you want to pursue.

When you work with a reputable and experienced mortgage originator like Capital Home Mortgage, we can point you in the right direction. If you need more information about our Brownsville Renovation Home Loans, don’t hesitate to call and speak to one of our Renovation Mortgage Team at (800) 850-4255.