Home Improvement Financing
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Home Improvement Financing
Home improvement projects can be a wise and worthwhile investment that improves the function, enjoyment, and most importantly the value of the property. Many homeowners have various home improvement projects that they want to be completed and would rather use the existing equity in their homes to finance the project instead of paying cash out of pocket. Whether you want more space, new amenities or updated finishes, a home improvement can deliver it.
Here at A Plus Mortgage Co, we offer a variety of options to make that a reality. We can accomplish this by refinancing the existing mortgage and then adding the cost of the home improvement or if the existing first mortgage rate is too good to touch, we can simply do a Stand-alone second mortgage to fund the improvement project and avoid doing anything with the existing first mortgage. We can also structure the loan in a way that is unlike a traditional mortgage where the borrowed amount is limited to the home’s current value, the loan we would use would be based on the post-improvement value. This type of financing can be used to purchase and renovate a new home or to renovate a currently owned home. Qualifying home improvement projects typically include most improvements or repairs that are permanently affixed to the home and must add value.
There are multiple home improvement projects a homeowner can select. Whether you want to add new windows and siding throughout the home or add solar panels to save thousands in energy costs, or to finish an unfinished basement by adding additional bedrooms and family space, or purchasing a home and doing the improvement immediately before even moving into the property. All can be obtained via home improvement financing.
Here is an overview of the steps in the home improvement loan process:
Since your project likely hinges on obtaining financing, contacting a lender with a strong home improvement loan department like us is a recommended first step. We will discuss your options with you and help you to select the right loan program that best meets your needs. Then, you will read and sign your loan documents, provide the necessary personal information and documentation, and submit your loan application for pre-approval.
Before your loan can close, you will need to determine the cost to complete your improvement project and the permits required. This includes obtaining quotes from a reputable, licensed, and insured residential contractor. You must select your contractor before the home’s appraisal is ordered and they typically must be approved by the lender.
LOAN PROCESSING AND UNDERWRITING
After your application is submitted, the loan processor will assemble your loan package and review your credit, financial, and employment details. Your contractor will submit a proposal, and an appraisal will be conducted that includes the scope of the planned work. Then, the underwriter will review your complete application, including the sales contract (if you are buying a home), appraisal, and title, and decide whether to approve your loan.
If your loan is approved, a closing date will be set on which you will sign the final documents and the loan will be funded. Typically, your first mortgage payment will not be due until the second month after your closing date.
HOME IMPROVEMENT PROJECT START
Within two weeks of closing, you will receive a welcome kit from a draw administrator (the person who oversees the drawing and distribution of your loan’s funds). Depending on the type of loan you selected, the project must typically begin within 30 days of closing and be completed within six or 12 months.
Prior to drawing the first funds, you must have any required building permits in place. When a stage of the plan is complete, you will call to request a draw. Your draw administrator will require an inspection to be performed, and upon a clean report, a check will be written jointly to you and your contractor.
The draw process may be repeated until the project is complete. A final inspection and title update will be obtained by the draw administrator, then a certificate of occupancy/final inspection is required for any permits previously issued. Congrats, you can now enjoy your upgraded, improved, and now more valuable home!
To learn which home improvement loan options are available to you, how much financing you can obtain, and what your estimated payments would be, get in touch with us now for a free mortgage consultation.
Programs included on this page of our website are subject to approval based on individual program guidelines and borrower’s credit and underwriting approval. Contact your A Plus Mortgage Co professional for full program details.