Renovation Loans: How to Mortgage my Home Makeover

There’s a lot of ruckus about home renovations these days. Perhaps inspired by popular TV shows and their quirky, wholesome hosts. Or the sudden abundance of old bicycle parts and chalkboard paint. But this is not the whole story. Americans are spending more on home improvements. And for good reason.

Why are Home Renovations so Popular?

A recent Harvard Joint Center for Housing Studies report revealed a skyrocketing number of remodels over the last 10 years. Since 2010, renovation spending increased by more than 50%. This can be attributed, in part, to two factors:

• New Construction Shortage – With older homes dominating the market, buyers are opting for fixer-uppers. Additionally, existing homeowners are pitching into the routine upkeep of their aging homes (i.e. roof replacement and plumbing upgrades.)
• Higher home prices – Higher home prices means higher equity. In turn, a growing population of homeowners can afford renovation loans.

What is a Home Renovation Loan?

Renovation loans allow homeowners to roll the cost of home improvements into the purchase or refinance of your home. There are a few different ways you can use the equity in your home to finance a remodel or renovation.

• Cash-Out Refinance – If you have a good amount of equity in your home, a cash-out refinance may be a good option for getting your renovation funds as a lump sum. 
• MakeOver Mortgage – You may have limited equity or are purchasing a new home. UHL’s MakeOver Mortgage allows you to finance up to 95% of the home’s new value at a low rate.
• Equity Line-of-Credit – Say you are just looking to do a few spruces. Maybe a new dishwasher, change out the front door, etc. A line of credit is sometimes the best option for lower denomination improvements.

Who takes out Home Renovation Loans?

• First-Time Buyers – Rolling the cost of renovations into your first mortgage can be a very attractive option. The lower the home price, the less money needed for a down payment. Plus, there is something to be said about the excitement of choosing exactly how your first home will look.
• Long-Term Dwellers – No matter how timeless your home is, parts of it will eventually age. The top three home improvements in 2019 were flooring, plumbing and built-in appliances. Not the flashiest projects, but necessary, nonetheless.
• Equity Builders – If you are planning on selling your home, certain renovations will maximize value. For example, a whole-kitchen remodel can show a nearly 60% return on investment when the house sells.

If you have been thinking about remodeling for a while but didn’t know where to start, we encourage you to peel yourself away from reality TV. Instead, start making your dream project a reality. Our Renovation Home Loan experts are here to help.