6 Reasons to Consider Renovation Loan Before Buying a House

Written by Posted On Monday, 25 June 2018 12:09

The cost of buying a good, new house these days is high. However, you can still get a bargain on a piece of real estate that is not yet finished in terms of designs. That means you pay less and then, finetune the space to your taste.

The problem with this model is having to churn out the down payment for the house and then, work on the money for financing a renovation.

Enter renovation loans.

With a good plan, you will be able to make your new home finely cut to whatever design you had in mind. If you are at the decision-making fork already, here are some six reasons why you should consider getting a renovation loan before buying that house.

1. Loan Limits

One of the reasons why you should consider getting a renovation loan for your new house over a personal loan is the loan limit applicable on it. You will get a lower ceiling that falls just in place with the type of renovations to be done when going for the former. On personal loans though, not only would you be made to deal with high ceilings but higher interest rates too

2. Spending Flexibility

Renovation loans are set up in such a way that they can only be used for one thing – the renovations you had in mind.

That means no extra splurging on a day at the mall, that big house warming party or other occurrences that could have eaten into a personal loan. That not only teaches discipline but ensures you don’t give in to the urge to spend more and borrow even more.

3. Ease of payment

You don’t have to pay off a contractor at once when you take out a renovation loan. You could opt to make your payments in milestones or get around to creating another system of staggered payments which would be beneficial to both parties involved.

4. Insurance

A good renovation loan package comes with its own insurance allowances. This is put in place so that the insurer will take care of all extra costs that might be incurred in the case anything happens to you.

There is no better way to make sure your project gets completed, one way or the other, than this.

5. Credit Score

One other area where renovation loans excel over other forms of personal loan is in the way they affect your credit score. Unforeseen circumstances may happen to deter the financing of the loan.

For renovation loans, that would result in a lesser dent on your credit score than what you would have encountered with a personal loan.

6. Convenience

To be candid, the ease and conditions around getting a renovation loan for your house beat what you could get on any other financing option. You could say you wanted to refinance your mortgage but your house isn’t even set up yet.

Applying for a credit card or using a line of credit are not so advisable because of their higher interest rates. Weighing the options, this type of loan is still a great package to go for.

 

As great as renovation loan sounds, a great deal of work goes into making each one happen. The application process has to be followed to the letter and you should be applying to a reputable organization too.

If you want both of those and more, you should consider taking out a VA Renovation Loan package.

With support for your home project, proper paperwork detailing loan and repayment details and also, a solid portfolio to match, they could be the key to your brand-new home

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