Choosing the right mortgage loan program is important for any prospective homeowner, but it’s even more essential if you have renovations to finance. Investing in a home that needs repairs might save you money on outright costs, but you have to factor in the expenses of renovation. Luckily, the FHA renovation loan has you covered.
In order to incentivize homes that will have a higher resale value after repairs, renovation loans allow you to borrow at the expected cost of the renovated home. These loans became more popular financing solutions during the housing crisis when homeowners had more difficulty getting second mortgages.
A renovation loan is perfect for people who want to buy foreclosure properties. The ideal scenario is to nab a house for very cheap, borrow at the higher cost of the expected resale value, and then make the necessary repairs with your mortgage loan. Whether you choose to sell the house for a profit or set up home there, it’s a good way to finance the necessary home repairs.
There are limitations on what the FHA loan will cover. If you are looking to take advantage of the flexible financing to put in a new sunbathing area, this isn’t the way to do it. The renovation loan covers more essential repairs rather than luxury items.
The expert team at Midland Mortgage is here to help you learn which mortgage loan programs might be right for you. Click here to get more information about mortgage loan programs that help finance home repair.