The home renovation boom seems to have no end in site as more and more people seek to improve not only the value of their home but modernize and make the home more functional. As more and more people seek out the funds to make the dream a reality, lenders are discovering new ways to provide the funding these projects require.
There are some steps that need to be taken in order to receive funding for a home improvement and they very somewhat from financing a new improvement on a home you own and buying a home that you intend to renovate.
For a home that you intend to renovate follow these simple steps.
- As a potential homebuyer, have your Realtor submit an offer on the potential property, ensuring that offer is conditional on obtaining adequate financing for the additional repairs required to the home.
- Arrange a detailed proposal for your lender showing the scope of the work to be done, and provide a detailed outline of the expenses that will be incurred during the course of the project.
- An appraisal will then be performed. The lender usually selects the appraiser. The appraisal will determine the value of the home after the renovations have been completed.
- Now as long as you are found to be worthy of the credit you are asking for then the loan should proceed. This amount should cover the cost of the homes purchase as well as the improvements that you are proposing.
- At closing the outstanding balance for the property is paid off and the remainder of the loan balance is put in an escrow account in order to pay for the repairs.
- The mortgage payments and the remodeling can begin after the loan closes for the property.
- The escrowed funds are released to contractors threw a series of draw requests for the work as it is completed. To ensure the completion of the job 10% of each draw payment is held back until the work is completed and the lender determines there will be no liens against the property.
This process is similar for a basic home improvement loan. The difference being you will only be borrowing the funds for the improvement as you already have title to the home. For additional information about Home Improvement Loans contact your lender.
