A renovation mortgage is a home purchase or refinance loan program that allows the approved applicant to plan for and pay for home improvement projects at the time of purchase, or afterwards with a refinance. The loan programs usually offer fixed rates, and usually convert to a permanent fixed rate program after the construction is done.
We've found that renovation loans allow our clients to find homes in areas they like that need work. This can often times be a HUGE savings because that house in need of repair may be found at a relative bargain when compared with newly renovated homes in the market. Our clients also report that renovation loans allow them to stick with the construction budget and keep from maxing out credit cards to complete the work!
One of our favorite features of a renovation loan is that the appraisal will be made reflecting the 'as-completed' value of the home. That means that before you even purchase the home, or before the refinance closes you will have a pretty good idea of your return on investment for the work performed!