Renovation Financing

Home renovations come in two different scales – cosmetic and complete redo. You will probably need assistance from a financial institution to finance the large scale renovation. When tackling that big project, you will need to figure out the budget before you can go to your bank and ask for a loan. They will need a lot of details before they approve any type of home renovation financing.

You will obviously go to a lending institution you have dealt with in the past. Your current bank or credit union knows you and your track record. They will be more inclined to lend you the money you need because they know you are responsible and will pay back your debt, since you have taken out and paid back loans with them before. Therefore, you are not a risk to them and they know their money is in good hands. That said, the lending institution will still need to know where the money will be spent. Before making an appointment with the bank, have all your papers in order.

When you walk into the bank, be prepared. Have all the documents ready. Have your plans on paper so you can show the loan officer exactly what type of renovation financing you are looking for. The more information, drawings and exact details you have, the better. Be prepared to answer any questions that are thrown at you. The more you know about the project, the more comfortable the loan officer will be to lend you the money you need.

Any proper renovation made to a home adds value to it. If you go to the bank that holds the mortgage on your home for the loan, the more they will be willing to finance your project.

Another important aspect to getting financing for a renovation is if you are selling the property after you are done renovating it. If you mention to the loan officer that you are renovating and then selling the property and that you will paying off the loan with the proceeds of the sale, they are much more apt to give you the loan because it is a much shorter term. Anything that will add equity to your home is a plus when going to a financial institution for renovation financing. Being prepared, being a prior responsible account holder with the bank and showing that you are adding equity to your home goes a long way to getting a renovation loan.