Learn how to renovate your new home! Getting started in your new home is an exciting adventure, but maybe it needs some work sooner rather than later. In order to help you begin the transition from dated abode to dream home, let’s look into the details of how to get the cash you need to renovate your new home in Kauai.
The Heavy Hitter
A Fannie Mae HomeStyle loan is a conventional loan through the United States’ federal mortgage lender, Fannie Mae.
Determining if you qualify for this type of loan is done in part through an appraisal to calculate the estimated future value of your home after the completion of your proposed renovations. The HomeStyle loan allows you to borrow up to 80 percent of the future value of your home, with a total maximum loan amount of $417,000.
The credit qualifications can be a bit tight, but this downside is countered by the incredibly low-interest rates packaged with the HomeStyle loan. A final point to note is that there is a ceiling of 50 percent on the future value of your home that can be used for your renovations.
The usual rules regarding Private Mortgage Insurance apply when going with a HomeStyle loan, so a 20 percent down payment will eliminate that concern.
The Smaller Scale Approach
Certainly not playing second fiddle to Fannie Mae, 203(k) is a program that issues loans to homebuyers through the United States Federal Housing Administration.
Due to it being a loan through the FHA, the credit requirements are quite a bit more relaxed than private loans.
Within the 203(k) program you have two available loan options: limited and full. A limited 203(k) loan covers up to a maximum of $30,000 for funds to renovate your new home, but these improvements cannot be related to structural or health and safety issues. The full 203(k) loan’s limits are determined by your region, and it does not come with any limitations on the types of renovations it can cover. In the case of both the limited and full 203(k) loans, they come with Private Mortgage Insurance built into the loan for its entire life. This means you’re stuck paying PMI with any 203(k) loan until you either pay off the loan or refinance out of the 203(k) program.
As is always the case, it’s best to carefully run the numbers a few times to figure out which type of loan can truly help you accomplish your goals prior to applying for anything.
Tap Any Equity
It may seem a bit early to attempt this, but it’s possible that you could open a home equity line of credit with one of your local financial institutions to get the funds to renovate your new home.
This is different than a regular home equity loan that provides a lump sum of finances for your renovations. The line of credit route will allow you to make smaller purchases to get your renovation projects completed over a longer period of time without necessitating the larger payments that would come along with interest on a larger loan.
Treat it responsibly – like a credit card – and be sure to pay it back as soon as possible, and you’ll be chipping away at those renovations bit by bit.
Fill the Personal Vault
The most straightforward way of making your renovation dreams into renovation reality is by cutting your expenses to the bone, saving as much of your income as possible, and exercising disciplined patience.
If none of the above loan options seem feasible or realistic for you, it could be incredibly wise to give yourself time to consider your renovation plans while building up your savings. There’s a good chance your choice of materials, colors, and themes could very well shift, and you’ll find yourself replanning portions of those renovations.
Professional Help Finding Cash to Renovate Your New Home in Kauai
If you need some direction to help you find the money to renovate your new home in Kauai, contact us today at 808-634-4518!