Applying for Loans When You Decide to Remodel
- May 28, 2015
- Shantell Russell
- Personal Finance
In some cases, getting your dream location within your budget might mean purchasing a home that requires substantial time, energy, work and money. While a remodeling project might seem daunting, there are methods, techniques and resources that can help you tailor your home to your wants and needs.
Loans for Remodeling
Whether you have to completely remodel your kitchen or update a few features in your bathroom, the Department of Housing and Urban Development has resources that you can benefit from and help solidify your dream home without spending too much money.
HUD offers Title I Home and Property Improvement loans which can be especially helpful when you need to renovate your house. With a Title I loan, HUD will insure private lenders and allow you to get access to money for renovations and projects that can help increase the value of your house and property. You can find available Title I lenders near you by taking a look at HUD's website.
A loan can be insured for as much as $25,000 for a single family house. To qualify for money to use toward improvements and repairs, the house must be completed and lived in for at least 90 days and the actual loan will only be distributed with the presence of a deed of the property or proof of mortgage. As a borrower, you must have a good credit score and have the resources to make monthly payments back on your loan.
Another option that may be appealing to you as a homeowner is a 203(K) Rehab Mortgage Loan. The Federal Housing Administration allows you to apply for this type of loan to repair a single family property. However, you can repair a property that has up to four living units. In addition, you can use this loan to convert a single-unit building to a multi-unit complex or a multi-unit building to a single-family. To qualify for this loan, the real estate you own must have been built and completed for a year.
The PowerSaver Pilot 203(k) Mortgage is another loan that you can use to make renovations to your home. To qualify for this loan, you must incorporate upgrades which save energy. These loans are typically used for lower-cost home upgrades.
Saving Money During a Renovation
Remodeling your home does not always have to cost an obscene amount of money. By organizing your projects, knowing what to splurge on and where to pinch your pennies, you can improve the value of your home without many large expenses.
Before beginning your project, you should make a list of all renovations that are most important for your home. For example, if the house you purchased does not have a properly working heating and cooling system, replacing this unit should be one of your top priorities. After listing the projects that are absolutely required, you can begin making a list of all areas of the home you would like to see improved. Consider where you will be spending the most of your time and put these spaces at the top of your list.
An additional consideration you should think about before deciding which projects are most important is knowing what upgrades will make the most substantial impact on the value of your home. In many instances, the areas where you spend the most time will also be the spaces with the biggest pay back. According to HGTV, updated kitchens and bathrooms typically provide the most valuable return on investment. If you are interested in selling your home in the future, a kitchen with great counter space and new appliances will be a more sought after feature than a fireplace in the master bedroom.
When you are making your decisions for new features and materials you plan to use in the remodel, consider discussing options with your contractor first. This Old House recommended inquiring about extra supplies that the contractor has on hand to save money, or purchasing imitation materials that might also alleviate costs. For example, instead of granite, think about a less expensive option, such as quartz, which can look similar to its more expensive counterpart.
Doing Some of the Work Yourself
When you are tackling a remodeling project, do not be afraid to do some of the work yourself. While plumbing might not be something you feel comfortable re-working yourself, painting and demolition might be two tasks you can easily do on your own. By handling these projects yourself, you can save money that you would have otherwise spent on professional help.
Before doing any renovation task by yourself, ensure that you are comfortable with the work and you know whether there are any risks present. For example, if you are taking out a wall, ensure that no electrical work is damaged in the process, or that the wall is used to support the structural integrity of the home.