Who doesn’t love the television show, Fixer Upper? Chip, Joanna and the Gaines children have found their way into the hearts of many in their handful of seasons on HGTV. Their warm personalities certainly don’t hinder their lovability but we watch because their ability to “take the worst house, in the best neighborhood and turn it into a client’s dream home” is spectacular! We love to see a house that easily could have been looked over become a beauty; not to mention, how much the value of the home increases. But how do they finance these projects? If you wanted to improve your home through renovations, how would you finance it? There are a few options; credit card, savings, HELOC (home equity line of credit) or a renovation mortgage.
If you find yourself not wanting to empty out your savings account or accumulate a large amount on your credit card for that room addition, the new floors or adding on a garage; don’t worry you aren’t alone… especially if there are better ways to finance the project! Another option was the bank offered, HELOC, which is based on the amount of equity someone has in their home. This poses a problem for many homeowners who lack equity; limiting the funds for the needed or desired improvements. Additionally, it acts as a second mortgage which can create problems down the road should a homeowner want to refinance to a lower interest rate. That brings us to the renovation mortgage, specifically the FHA 203k.
You may be thinking, “a mortgage? I thought you said this is to improve my current home.”. If you refinance your home using the 203k loan that is precisely what you will be able to do! And with FHA’s low down payment, your upfront costs will be minimal. The FHA (Federal Housing Administration) 203k Loan has two tiers, the limited and the standard, so no matter what upgrade you have in mind, the 203k will likely cover it. Projects range from painting to new windows, to upgrade heating systems, to kitchen remodels, and even brand-new additions or structural changes. The only items that the 203k won’t cover are luxury items such as pools or outdoor kitchens—but that’s where the HomeStyle Loan comes in (read more about the Homestyle loan here). So instead of searching for a new home with the features you have always dreamed of having, add those features to your existing home. Get started today by filling out this contact form, just click the link.