Home Renovation and Financing
So you have the urge or need to
renovate your home? Maybe a new baby has come along and you need
more bedrooms or maybe the kitchen is too small and you want to
expand the size of the home. Whatever your intentions, you may not
have the available funds in your savings account and you may require
some household finance.
Depending on the size of your renovation project, the home finance
lender will want to be assured of several things:
• You have acquired the necessary building permits. If the home
finance is a substantial dollar amount, the lender will not want to
loan any money without knowing that the city or township has
approved the prospective construction.
• You must have adequate house insurance in place. The home finance
lender may ask to review your insurance policy to determine whether
the amount and type of insurance will cover the expansion.
• You may be required to show blueprints of the expansion to assure
the home finance lender that the expansion is viable. Home finance
specialists need to protect their monies or the investment of their
lenders so knowing the renovation will be carried out properly is
important to everyone.
• You will need to show proof of income and most likely the same
type of household finance information as when you applied for your
mortgage. The home finance lender will want to see that your
financial situation has improved or at the very least has not
deteriorated and you are still able to carry the home loan.
• You may be asked whether a qualified building contractor is
completing the renovation or yourself. The lender may wish to see
the contractor’s credentials. And, if it is yourself and maybe your
buddies, the home finance lender may inquire as to your abilities to
complete the job. Again, the utmost concern is the protection of
their companies’ or investors’ funds.
• You will need to speak about a time-line, both in terms of the
actual expansion work and of course in terms of the home finance.
How long will the renovation take to complete? For what period of
time do your require a home loan? Some home finance lenders will
adjust your existing mortgage but some may require you to pay the
home finance in a certain amount of time.
• You may be required to have a home appraisal or assessment of the
home to determine whether the value warrants the renovations. For
example, if the renovations are considered “too rich” in nature,
then the home finance lender may not allow the home loan to be
processed because when the home is sold, the value cannot be
recouped. Adding marble floors and gold faucets may not be suitable
in a neighborhood of homes selling for $80,000.
Sometimes, depending on the size of the renovation and your credit
worthiness, it may be just as simple to use your credit card or line
of credit for your home finance. It may not be as prudent in terms
of saving money on the interest but it would be a simpler and faster
process in that you are not required to jump through the hoops to
obtain your household finance.
Review all your options and know what is available. Informed
decisions are always better in the long run as opposed to quick,
unintelligent decisions that may lead to heart break when your
renovations are still in progress ten years from now. If you need to
home finance the project, then you need to see progress and know
that there is a positive outcome to the project at hand and you need
to know your home loan was worth the costs.
In summary, be prepared before you approach the bank or a private
home loan broker. Knowing what is expected of you and having all
your documentation in order will provide you with a better chance of
securing that home loan.
Please remember that the above-discussed points are general
guidelines. They are not to be construed as definitive requirements
set out by home finance lenders. Each lender has different
requirements and you are best served by speaking directly with your
home loan expert.
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First Time Buyers ??? |
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