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Different loan for renovations?

Hi, We're looking to buy a home and are open to renovating an older home. Will we need a different kind of loan for a home that will require renovations? Or do we take out 2 loans? How does this work?
Asked By Maria | Atascosa, TX | 678 views | Remodeling | 1 year ago
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Pro
123 Answers
Chris Yochum

Dickson Realty

(19)

203k loan can be a good option. Also connect with Feeasy that can do loans like this.
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Semi-Pro
83 Answers
Marty & Abby Champagne

RE/MAX Market Place

(33)

No need for two loans. There are special loans for homes like this. Talk to a local lender who maybe can sit down with you and go over all your options.

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Rising Star
15 Answers
Janet Stanek

Lake Homes Realty

(16)

One thing to consider when taking out a renovation loan is the cost of renovations. In certain instances, when the cost of the reno is significant, a HUD advisor is required to oversee the renovation - which can add to the complexity, cost and timing. Check with your lender on what is permitted in your renovation. Also, for the most part, a renovation loan will require that all work covered by the reno portion of the loan be completed by a licensed contractor - not the homeowner.
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Novice
5 Answers
Catherine Horton

Your Key to Memphis - eXp Realty

(19)

I highly recommend you call a local mortgage lender in your area. There are renovation loans out there known as 203K Renovation. Based on your situation, the lender will give you the best advice. Any real estate agent in your area should be able to refer you to someone as well. Good luck!
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Novice
1 Answer
Isaac Zapata

Keller Williams Realty

Maria, Im a realtor here in Devine, would you like me to connect you to my local lender? 210-860-2974

More Information

  • Is there a specific loan for renovations?

    A home renovation loan is a type of loan specifically designed to help homeowners finance the costs of renovating or remodeling their homes. It provides individuals with the funds needed to make improvements or upgrades to their properties.

    Home renovation loans come in different forms, and the specific terms and conditions may vary depending on the lender and the country in which you reside. Here are a few common types of home renovation loans:

    1. Personal Loans: These are unsecured loans that can be used for various purposes, including home renovations. Personal loans generally have higher interest rates compared to other secured loans but offer more flexibility in terms of usage.

    2. Home Equity Loans: A home equity loan allows homeowners to borrow against the equity they have built in their homes. Equity is the difference between the market value of the property and the remaining mortgage balance. These loans often have lower interest rates than personal loans because they are secured by the home itself.

    3. Home Equity Line of Credit (HELOC): Similar to a home equity loan, a HELOC allows homeowners to borrow against their home's equity. However, instead of receiving a lump sum, borrowers are granted a line of credit that can be used for multiple expenses over a specific period. Interest is only charged on the amount borrowed, not the entire credit line.

    4. Construction Loans: If you plan on undertaking major renovations or building an addition to your home, a construction loan may be appropriate. These loans provide financing for the construction or substantial renovation of a property. Construction loans typically have a short-term duration and may require periodic inspections to ensure the progress of the project.

    When considering a home renovation loan, it's essential to evaluate the interest rates, repayment terms, fees, and eligibility criteria of different lenders. Additionally, you should have a clear plan for your renovation project and a realistic budget in place to ensure that the loan amount will cover your expenses.

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