How they work:
A home improvement loan is a new type of loan that combines the best elements of a construction loan with a home equity loan. It is the only home improvement loan that does not require homeowners to refinance and it is the only home improvement loan that does not require funds to be released to the contractor through an inspection process and of messy draw schedule. Like all home improvement loans, these loans are based on the value after renovation allowing homeowners to borrow the most money at the lowest rate possible without having to refinance.
Home improvement loans work for existing homeowners or homeowners who buy a new home and renovate it.
For existing homeowners who have locked in a very low rate on their first mortgage, being able to borrow against the post-renovation value without having to refinance again makes the home improvement loan the ideal choice.
For homeowners looking to buy a home that needs a little love for the renovation, a home improvement loan allows buyers to acquire the property with a traditional mortgage and then use a loan for the home. home renovation after closing to fund renovations. It is much easier than trying to use a home improvement loan for the buying process.
â¢ Does NOT force homeowners to refinance their first mortgage, which means homeowners can keep rates low and avoid restarting their mortgage clock. Same low rates on home equity – for terms of 10 to 20 years, the rates are generally the same as a traditional home equity loan or line of credit.
â¢ Lower fees – because the loan does not require you to refinance your entire mortgage, you will pay less closing costs because it is based on a smaller basis.
â¢ Can borrow from $ 20,000 to $ 500,000
â¢ It is the only home improvement loan that does not require homeowners to refinance and it is the only home improvement loan that does not require funds to be released to the contractor through an inspection process. and messy draw schedule.
â¢ Since home equity loans typically have a maximum term of 20 years, the monthly payments for these loans are often slightly higher than payments for other home improvement loans with terms over 30 years.
Dort Financial began offering a new home renovation loan program in 2021.
âWe have found this program to be very beneficial for homeowners who do not currently have equity in their home to finance their home improvement project. This allows us to fulfill our mission of opening doors for our members by providing quality financial services, âsaid Marc Tatarcuk, Director of Home Loans at Dort Financial Credit Union.
Dort Financial also offers an FHA Title 1 Home Renovation Loan, Fixed Rate Home Equity Loan, and Home Equity Line of Credit (HELOC). Whatever the need to finance home renovations, the credit union’s mortgage advisors will help the borrower determine the best home improvement loan to meet their unique needs.
Dort Financial’s Home Equity Support Specialist can be reached at 888-837-4317.