Monday, August 5, 2013

Renovation loans give homebuyers an edge in a competitive market

Renovation loans give home buyers an edge in a competitive market
Just a year ago home buyers could choose from a bounty of properties on the market. Today things are starkly different. In many locations throughout the United States, inventory of homes for sale is at historic lows, creating a seller's market where multiple buyers get into bidding wars over move-in-ready homes.

If buyers can look beyond aesthetic characteristics like paint color, hardware and floor coverings, they may discover a diamond in the rough, especially if the home is in the neighborhood where they prefer to live. For example, if they like the overall design of a particular home, but the kitchen is straight out of the '70s and the deck needs major repairs, a renovation loan can help them purchase the property while upgrading the kitchen and outdoor space exactly how they want them.

Renovation loans can also help buyers who want to purchase in a particular neighborhood where most home prices exceed their budget. Properties that need work are typically listed at a lower cost and often go unsold, creating an opportunity for people willing to make improvements. Buyers can use a renovation loan to get into the neighborhood of their dreams, quickly build equity and customize a home to their personal preferences.

Several variations of renovation loans are available. Requirements for the borrower, the amount you can borrow, and the overall structure of the loan are different for each program. Typically, the loan is based on the estimated home value after improvements, and buyers will need to get bids from licensed contractors to help determine the total loan amount as well as a time line for the work to be completed.


(BPT)

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