When you want to get a home renovation loan to complete a repairs that are going dad to the value of your property, you definitely need to know what type of loan you will be applying for with regards to what fits with your situation. Many people consider financial data to be either to drive for them to focus on or too complicated for them to understand, but it absolutely does not have to be!
When looking for a home renovation loan, here are the four typical types of loans that you will be choosing between, includes a simple summary of what you need to know about each one.
This is one of the most common home repair loans that are taken out. This loan is meant for people to make repairs to their primary residences. Another limiting factor is that it is for properties that need relatively minimal repairs totaling less than $35,000. One of the benefits of this type of loan is that it requires as little as a 3.5% down payment. This means that you can get your home repairs started for a very small amount of capital, adding to the overall value of your property and bringing your return on investment when you decide that it is time to sell.
Consultant FHA 203K
This type of loan is meant for properties that need more extensive renovation, totaling more than $35,000, or that need to have repairs done to foundational aspects of the home or to any wells are swimming pools that might be on the property. This loan is also a bit more pride in the amount of contractors that can be involved in the project, allowing for one general contractor and up to three subcontractors to work on the property.
Homestyle Renovation Loan
This loan is put forth by Fanny Mae, and requires very little upfront capital – only 5% for a primary residence, 10% for a second home, or 20% for an investment property.
Homepath Renovation Loan
This is a very specialized type of home repair loan that is meant only for foreclosures which are owned by Fannie Mae. However, there are no restrictions on whether the property must be a primary residence, a second residence, or an investment property – it can be any of those. The upfront money required for a primary residence is only 3%, but for other types of properties there is a 15% down requirement.
As you can see, your situation will only fall into one of the circumstances covered by each of the four types of home renovation loans that are available. Once you understand the purpose of each of the four types of loans, it is not difficult to determine which type of loan you should be applying for. Once you have the details of your loan application straightened out, you can move on to the satisfying part of the home repair – actually improving your property!