If you are looking for a home, a home renovation loan may be a better choice and also more cost-efficient than buying a home that is turnkey ready. A home renovation loan is a mortgage in which the cost of repairs are rolled into the loan itself. The most popular loan programs that have this ability are the FHA Loan Programs, also known as FHA 203k, The USDA Renovation Loan Program, and the VA Renovation Loan Program.
There are several reasons why this loan-type is advantageous. You have the ability to upgrade your home in a very cost-efficient way, you can add your own personal style with those renovations, and you can also add instant equity to the home before you even purchase! So not only do you pay less for a home that has the upgrades you may want, but you also pay yourself in equity by personalizing your home!
Homes That Need Renovations Are Cheaper
One of the biggest benefits is that homes that need renovations are usually priced lower on the market. If a home buyer is looking for a home that fits their budget but also wishes to save a bit of money getting the quality of home they want, this is one of the better options. For example, being able to renovate an outdated worn-down kitchen to an upgraded kitchen while rolling in the costs into the mortgage more often than not results in a purchase price lower than a home that has the upgraded kitchen already in the home.
You Can Add Personality To Your New Home
Another advantage to renovating a home and rolling the costs of it into your mortgage loan is the fact that you can add some personal flair to your home without necessarily having to rebuild the entire home. Finding a home that may need a few repairs allows the buyer to make the choice of how they would like those items repaired. A run-down kitchen with soapstone countertops not your thing? Roll in the costs of beautiful granite countertops to give your kitchen that modern look instead. Bring out your personality by renovating and upgrading the way you want!
Instant Equity: Money In Your Pocket Later On!
One of the biggest advantages is the fact you are adding value to your home before you even purchase it. By upgrading core areas like bathrooms, kitchens, decks or patios, you are adding those amenities to your home. This would be a very strategic way to get the most out of a possible cash-out refinance later on down the road, putting even more money back into your pocket upon receiving a favorable appraisal to determine your home’s new value. Alternatively, if you’re looking to upgrade into a new house altogether, selling your previous home that now has recent upgrades will increase the selling price as well. Not only do you save money making the purchase to begin with, but you also make money in equity after the renovations are complete!