Top-Rated Realtor Suggestions on Home Improvement Loans

Upgrading or improving a home could be costly. Thus, the top-rated Realtor presents some of the best home improvement loan options to help you with the project.

You only have to pick the best loan option that fits your situation. 

However, remember to fix your credit scores before applying for any loan for a higher chance of approval. High credit scores can also let you enjoy better deals, such as low-interest rates.

That’s when you should search about these loan options for your home upgrade.

Best Home Improvement Loans, According to the Top Rated Realtor

1. Home Equity Loan

One of the quickest ways to borrow cash for your home improvement project is to grab finances from your home equity.

Home equity is the difference between your property’s current value and your outstanding mortgage loan.

For example, your house is worth $200,000, and you still have an outstanding mortgage debt of $120,000. It means you have an $80,000 home equity.

Now, there are two ways for you to tap into your home equity:

• Borrow the Maximum Amount Possible

You may borrow as much cash from your home equity as possible. Most lenders allow loans up to 80% or 85% of the home equity. And this loan usually comes with a fixed interest rate.

However, you have to make your home as collateral for the home equity loan in most cases. It means your property would face foreclosure if you default on the loan.

• Home Equity Line of Credit (HELOC)

The top-rated Realtor also notes that You may tap on your equity through the HELOC loan option. It lets you borrow only the amount you need instead of grabbing the lump sum of your equity. This option has excellent flexibility because you may borrow again after paying an earlier HELOC loan.

However, this loan option usually comes with adjustable interest rates. So, your interest may drop or rise without prior notice.

Carefully choose which between these two options you should get when tapping on your home equity. Also, prepare for a home appraisal because lenders want to know your home’s current value before you can borrow against your equity.

2. Federal Housing Administration (FHA) 203k Home Renovation Loan

This home improvement loan option comes from the primary FHA mortgage program. And same with the FHA mortgage, FHA 203k also offers low interests and down payments.

However, this loan option revolves on providing finances for home improvements. The thing is, you may borrow the primary FHA mortgage to purchase a fixer-upper home. Then, use the FHA 203k to renovate the property.

Although, you have to comply with a particular process for the loan. The lender will hire an appraiser to provide an appraisal report of your home’s current value and its estimated appraised value after the renovation.  The lender will approve an amount equal to the difference between the two appraisals.

3. VA Home Improvement Loan

Qualified military veterans may also get a home improvement loan from the VA program. It lets you enjoy low interest and down payment, plus there is no ceiling cap for the amount you may borrow. 

However, the top-rated Realtor reminds you that you can only use this loan for particular home improvements. Moreover, you have to select a contractor from the VA-approved list.

4. Fannie Mae Homestyle Loan

This loan option lets you borrow a hefty sum of cash for a home upgrade project. You may borrow 75% of the property’s new value after the improvement. Or 75% of the total amount of the home’s current value plus the upgrade.

However, you must pay 3% of the amount of the renovation plus the current home value as a down payment. Moreover, you can mostly enjoy this loan for a primary residence. Borrowing for an investment or vacation home renovation leads you to a strict ceiling amount.

5. Fannie Mae Homestyle Energy Loan

This mortgage option from Fannie Mae revolves on providing finance for improving a home’s energy efficiency. So, think of HVAC upgrade, water heater upgrade, insulation system installation, applying weather-proofings on doors, and many others.

You can only borrow up to 15% of the home’s estimated value after the upgrade. Moreover, you must pay 3% of the said value as a down payment. That’s a sweet deal if you plan to go green.

Consider These Home Upgrade Loan Suggestions from the Top Rated Realtor

These home improvement mortgages are all excellent choices. However, you have to select the correct option for your situation. Consult the top-rated Realtor for better advice on which loan option to take and how to proceed with your project.