Got some big plans for your next home renovation project, but need the money to do so? You’ve likely encountered a home renovation loan and wondered whether it’s worth taking one out. If this sounds like you, stick around because this blog will explore the benefits of a home renovation loan and whether it’s best for you.
What is a Renovation Loan?
Often called a 203k Renovation loan or home improvement loan, this type of loan can come in many forms, like Homestyle Renovation loans, Energy Efficient Mortgages (EEM), and Home Equity Line of Credit (HELOC) loans. These loans provide the borrower with additional finances to renovate or upgrade their home within a single mortgage. These loans can be tailored according to your renovation needs.
The great thing about home improvement loans is that they’re a catch-all term, so they can be used for a variety of reasons. Some common reasons for getting this type of loan include:
- Kitchen and bathroom remodel
- Completing a basement
- Improving the energy efficiency of your home
- Installing new roofing
- Updating heating and cooling systems
A Look at the Pros and Cons
Are renovation loans worth it? Here are some pros and cons to help you answer the question.
Pros
- Lower interest rates compared to other loans make them an affordable way to finance home improvements
- Faster processing to allow you to get your project started sooner
- It may come with tax benefits
- Longer payment terms
- Loans are based on the expected post-renovation value of your home. So, larger projects like kitchen remodels can help you get a larger loan amount
- An excellent way of adding value to your asset (home)
Cons
Before you take out a home improvement loan, take a moment to weigh up the cons and decide if this is the right loan for you.
- Additional debt that you need to be able to comfortably afford monthly
- Renovation loan amounts can be smaller compared to other loan types
The Verdict
Renovation loans are definitely worth it if you need a loan with a faster processing time, reasonable repayment terms, and can be tailored to your project needs. Taking out a renovation loan is a much better option than using a personal loan for your home renovation project.
Renovation Loan Specialists in Oakhurst
Get your next home project started with a renovation loan application. The expert team at Granite West Funding can assist with this process. Schedule a free consultation and get pre-approved today by calling us at (559) 540-2275.
