Considering a Major Remodel? We have Options.
Location, location, location. We’ve all heard this about real estate – and it’s so true, right? You love your neighborhood, your schools and getting to work is so convenient. But your house no longer meets your needs.
If you’re considering a remodel, take some time to talk with a trusted Realtor to find out what projects are most likely to add value to your home.
Once you’ve decided on a plan, Great Midwest can offer two options for financing your remodeling project. Another important point here: You’ll find that big banks and mortgage brokers have little to no alternatives, especially if you’re in need of construction financing.
Home Equity Loans
If you have sufficient equity in your home “as-is,” a Great Midwest Home Equity Loan may be your best bet. This is most often an easier and less costly route. We’ll use either a new appraisal (cost $375) or, on a more limited basis, the current tax assessment to determine your home’s current fair market value.
Without a need for an appraisal, we can usually close and have funds in your hand with a couple of weeks of receiving your financial information and formal application.
Most lenders like Great Midwest Bank will lend as much as 80% of the value. Using this figure as a guide, take your home value – less the current first mortgage amount – provides the available home equity amount available.
[Home Equity Loan vs Home Equity Line of Credit]
In the current market, however, we realize home equity has decreased in nearly all of our markets, but far less than it has nationwide. When that’s a challenge, we can consider a Construction Loan, utilizing the “post-completion” equity in the value of the soon-to-be remodeled home. The loan amount is based on this projected value and can be used to payoff any existing first mortgage, though that’s not always the case.
Though you’re not building a brand new home, the process looks and feels very much the same, short of a few steps. An appraisal is required and the appraiser will utilize the plans/prints of the project, the cost breakdown from the general contractor, as well as data from the last 6-9 months of recently sold homes.
The timeline from delivery of the application, prints/plans and cost breakdown to the closing table is approximately 3-4 weeks with costs that are higher, on average, than a regular purchase or refinance transaction, in part due to title costs, which one of our experienced Loan Officers can discuss in more detail.
Upon completion of the construction project, most borrowers’ goal is to convert a construction loan into long-term fixed-rate financing, which can include additional costs.
[Guide to Financing Your Home Renovations]
Not sure where to start or having trouble determining the right program to finance your remodeling project? Contact one of our local loan officers to get the conversation started.