If your home is a bit of a fixer-upper, but you can't afford to tackle the repairs and upgrades on your own, it's time to consider a renovation loan. One of the great things about a renovation loan is that you can use the money to bring your existing home up to standards. Before you apply for your renovation loan, here are some tips that will help you through the process.
Determine if Your Home Is Eligible
When it comes to renovation loans, the first thing you need to do is determine if your home is eligible. Unlike normal home improvement loans, renovation loans require homes to fit specific criteria. First, primary and secondary residences are both eligible for home renovation loans. Second, multi-unit primary residences are also eligible for this type of loan. Finally, manufactured homes may also qualify for home renovation loans.
Understand the Limitations
If you're considering a home renovation loan, you need to know that they do come with some limitations. The most important limitation is that the loan cannot be used to build an entirely new home. That means you can't demolish your existing home and start from scratch. For that type of renovation, you'd require a different type of loan. Renovation loans must be used to repair and upgrade existing homes rather than to construct new homes.
Provide a Detailed Renovation Plan
If you're going to apply for a renovation loan, you'll need to have a detailed plan prior to submitting your application. Your plans must include the actual repairs and upgrades you intend to complete, as well as the costs and timelines associated with the project. In addition, the plans must be designed and documented by a licensed contractor before submitting them to your lender.
Choose the Right Contractor
Finally, if you're going to apply for a renovation loan, be sure to hire the right contractor. There are specific time limit constraints that must be followed for the project. If the contractor you choose cannot complete the project within one year from the start date, you'll risk losing your funding. Before you choose a contractor, be sure that they can ensure a completion date for your project that falls within that timeline.
If your home is outdated and in need of some improvements, apply for a home renovation loan. This loan will allow you to make the necessary changes that will help improve the condition of your home and bring it up to standards.