How They Work:
A home renovation loan is a new type of loan that combines the best elements of a construction loan with a home equity loan. It’s the only renovation loan that doesn’t require homeowners to refinance and it’s the only renovation loan that doesn’t require the funds to be disbursed to the contractor through a messy inspection & draw schedule process. Like all renovation loans, these loans are based on the after renovation value allowing homeowners to borrow the most money at the lowest possible rate without having to refinance.
Home renovation loans work for existing homeowners or homeowners purchasing a new home and renovating.
For existing homeowners who locked in a super low rate on their first mortgage, being able to borrow on the after renovation value without having to refinance again makes the home renovation loan the ideal choice.
For homeowners looking to purchase a home that needs some renovation love, a home renovation loan allows the homebuyers to acquire the property with a traditional mortgage and then use a home renovation loan after closing to fund the renovations. This is much easier than trying to use a renovation loan for the purchase process.
•Does NOT require homeowners to refinance their first mortgage, meaning homeowners can keep their low rates and avoid restarting the clock on their mortgage. Same Low Home Equity rates – for 10 to 20-year terms, rates are typically the same as a traditional home equity loan or line of credit.
•Lower fees – because the loan doesn’t require you to refinance your entire mortgage, you’ll pay less in closing costs because it’s based on a smaller base.
• Can borrow $20k to $500k
•It’s the only renovation loan that doesn’t require homeowners to refinance and it’s the only renovation loan that doesn’t require the funds to be disbursed to the contractor through a messy inspection & draw schedule process.
• Because home equity loans typically max out at 20-year terms, the monthly payments for these loans are often a bit higher than payments for other renovation loans with a term of over 30 years.
Dort Financial started offering a new home renovation loan program in 2021.
“We have found this program to be very beneficial for homeowners that don’t currently have the equity in their home to fund their renovation project. It allows us to fulfill our mission of opening doors to our members by providing quality financial services,” said Marc Tatarcuk, Real Estate Lending Manager at Dort Financial Credit Union.
Dort Financial also offers a FHA Title 1 Home Improvement Loan, Fixed Rate Home Equity Loan and Home Equity Line of Credit Loan (HELOC). Whatever the need is for funding home improvements the mortgage professionals at the credit union will help the borrower determine the best home improvement loan to meet their unique needs.
Dort Financial Home Equity Support Specialist can be reached at 888-837-4317.