How Can a Home Improvement Be Rolled Into my Mortgage?
Home remodeling projects take many shapes and forms, from a relatively simple project like updating your kitchen to a major one that includes redesigning the original floor plan to accommodate your changing lifestyle. The reasons homeowners have for remodeling are also quite varied. For example, they might decide to improve their home’s energy efficiency by installing modern windows and doors, or find that they want to add a room as their family grows.
In addition, our nationwide housing market includes much more than the activity of first-time home buyers. Consumers are also investing in their houses to increase their safety and comfort, and to safeguard their original investment. Not surprisingly, the Remodeling Activity Indicator (RAI), part of Harvard’s research, reports that homeowners continue to invest in what is their greatest asset in most cases, their home.
Why Remodeling a Home is an Option
Many potential home buyers are aware that one mortgage option will enable them to buy and renovate their new home by taking out a single loan. John Sway of Wells Fargo points out the most of America’s housing stock is 25 years old or more, and the demand exists for home loans for people who are interested in an older home that needs to be modernized.
Traditionally, mortgage options have been limited, particularly in those cases where the owner’s equity in the home was insufficient. Now, however, home buyers have options that were created with the goal of helping buyers and owners pay for home improvement and renovation. Compare mortgage options in your area.
How to Finance Your Home Renovation
The Federal Housing Administration’s (FHA) 203(k) loan program has become quite popular. Generally speaking, it is used to renovate a condominium or house that needs at least $5,000 in basic repairs, including plumbing, wiring, structural repairs or roof replacement.
Note that similar loan programs offer higher loan limits that provide buyers with additional financing to purchase and improve the property. Along with basic repairs, some of these programs include financing that can be used for luxury features like hot tubs, sun rooms and swimming pools.
How the Community Benefits
Sway points out that this type of loan also contributes to community revitalization. When consumers purchase an older home and make the necessary repairs, it escapes deterioration and remains part of the area’s housing stock. In the foreseeable future, many urban areas should notice a significant increase in remodeling activity when the price of a new home compels potential home buyers to focus on older homes for sale that are more affordable.Compare mortgage rates in your area.
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LaTisha Styles is a motivational speaker, millennial money expert, and spokesperson specializing in simple finance for millennials. LaTisha is the producer and host of Young Finances TV, a weekly series featuring funny, insightful videos on the basics of personal finance. LaTisha has been quoted in Forbes and Mainstreet, featured in The Economist, and mentioned in US News as a top personal finance expert to follow on Twitter. You can follow LaTisha on Twitter for daily millennial money tips to budget, invest and achieve success!