Should You Use a Credit Card to Fund Home Renovations?
According to a 2017 Houzz survey of nearly 11,000 homeowners, 33% paid for at least some of their renovations with a credit card—charging, on average, between $1,500 to $4,800.
The demographic most likely to fund renovations with their card? Millennials, at 41%, followed by 35 to 54-year-olds at 34%.
With a sizable chunk of homeowners hopping on the bandwagon, should you use a credit card to fund your new home renovations?
While there are several considerations to take into account, many homeowners aren’t aware there are other options for funding home improvements.
If you’re in the process of buying a home that’s in need of some updates, you’d be wise to consider the advantages of using a home renovation loan. Continue reading to learn more about our suite of renovation products, including the FHA 203(k) loan, HomeStyle loan and VA Renovation loan.
What is a home renovation loan?
In today’s housing market, it’s no secret that there’s a low supply of move-in ready homes for sale. This can be discouraging for homebuyers who are looking for homes in need of minimal updates and repairs. Whether you’re a first-time homebuyer or current homeowner, this is where a home renovation loan can help. While the need to renovate may still exist, a home renovation loan can help make the renovation process simple and effective.
Although they might not be move-in ready at the time of your search, looking for properties well under your budget can be helpful if you’re having trouble finding a home when inventory is low. These fixer uppers can be molded into your dream home with a few renovations using the FHA 203(k) or HomeStyle loan. An FHA 203(k) loan is an affordable financing option that can be used to turn a diamond in the rough into the perfect home. This loan option allows homebuyers to finance their home purchase and home improvements under a single mortgage loan. Plus, you’ll build equity before moving in! What’s not to love about that?
What is a HomeStyle Loan?
The HomeStyle loan is the first conventional renovation loan for primary residences, second homes and investor properties, covering you no matter where you’re at in life. With a HomeStyle loan, adding everything from personal touches to new additions and high-end finishes is well within reach.
When you chose a HomeStyle loan, you’ll also enjoy:
- Built equity before moving in
- Higher loan limits
- Remodeling made simple
- One loan and one closing
What is a VA Renovation Loan?
Simply put, a mortgage made for military members, but there’s so much more to the VA Renovation loan. With incredible features like property tax exemptions and low rates and fees, it’s safe to say that the VA hit a home run when they introduced this loan just last.
What is an FHA 203(k) Mortgage Loan?
The FHA 203(k) loan is a home improvement loan insured by the federal government that allows homebuyers to bundle their home purchase, along with any desired home improvements, under a single mortgage loan.
The loan helps homebuyers confidently address any problems that may have arisen during the inspection process and allows them to easily transform a fixer-upper into their dream home—without breaking the bank.
What are the Benefits of Using an FHA 203(k) Loan?
The benefits of applying for an FHA 203(k) loan outweigh those of using a credit card—the biggest being that the renovation costs get rolled into your monthly mortgage payment. With this more convenient payment option, homeowners have the opportunity to upgrade areas of their home that they may not otherwise have had the ability to afford.
From newlyweds transforming their first home, to people who found that their dream home needed a little bit more elbow grease to meet their expectations, the 203(k) loan leads to success more often than not.
And if you think this is only available to people in the process of buying a new home, think again. Current homeowners can also fund upgrades or repairs by refinancing into an FHA 203(k) loan!
So, before you decide to use a credit card to fund renovations for your home, do some research into the FHA 203(k) loan first. It could end up saving you a fortune in the long run!
If you’re interested in learning more about the FHA 203(k), HomeStyle or VA Renovation Loan, our team of experienced lending professionals can help! To speak with one of our mortgage lending experts, send us a message or give us a call at 800.521.5362.