Home Renovation Loan Q&A

Renovating your home can be one of the most fulfilling aspects of being a homeowner. When you renovate, you’re able to make your house exactly how you want it to be – you're in charge and your vision is what counts.  

Bathroom and kitchen renovations are among the most popular home renovation projects. Bathroom renovations can include new shower, tile work, sink and lighting. The end result can be a beautiful and functional space that will add real value to your home.  

Another very popular home renovation project is a kitchen remodel. A new kitchen can be the crown jewel of a home, with new flooring, lighting, cabinets, fixtures, and more. A kitchen remodel is a proven way to increase the value of your home.  

D. Shane Whitteker is the owner and chief broker at Williamsport mortgage company Principle Home Mortgage. He and his team specialize in helping their clients with all types of mortgages – including home renovation mortgages.  

Question: How can I get money to renovate my home? 

D. Shane Whitteker: There are a couple of options for renovation mortgages.  These are really designed to facilitate a renovation without the need to have excess equity to draw from.  FHA offers the 203K renovation mortgage and Fannie Mae offers the homestyle renovation mortgage.  Both options are good but have different aspects that may be more beneficial in certain circumstances.  For example, if your equity is very limited the FHA 203K is most likely going to be your best option.  

 
Question: What are some mortgage types I can get to renovate my home? 

DSW: The FHA 203K or the Fannie Mae Homestyle mortgage are the most common options for owner occupied residential mortgages. 

 
Question: Can I refinance my current mortgage to renovate my home? 

DSW: Yes, when doing a renovation loan as a refinance, your existing mortgage will be paid off and your renovations will be financed as well.   This will result in one mortgage to cover the renovation, closing costs and balance on your existing mortgage. 

 
Question: What are the limits on how I can spend money I get from refinancing my mortgage? 

DSW: You are only able to finance your existing mortgage debt, you can not get any cash in hand or pay off any other debts.  The money for renovations is also controlled with how this money can be spent.  The bank will have a structure to how the money will be disbursed and will follow that structure quite rigidly after closing and during the renovation process. 

 
Question: What types of home projects can I finance with a renovation loan? 

DSW: In general there are not a lot of limits on what you can do.  There are some limits in regard to pools and possibly high cost items but in general most renovations would be allowed.  

Question: Am I allowed to refinance my VA loan? 

DSW: Yes, you can refinance a VA loan.  You can refinance with another VA mortgage or you can use any other mortgage to accomplish the refinance if you needed to change the mortgage type for some reason. 

 
Question: Is now a good time to think about refinancing my home's mortgage? 

DSW: Rates are relatively low currently so I would say yes.  Equity is also up in general for most homeowners which is another important aspect when refinancing.  This gives more options to payoff other debts, get cash out or simply finance your closing costs when refinancing.  

 
Question: I have a reverse mortgage. Am I still able to refinance it?  

DSW: Yes, this is possible but mechanically a bit different than a standard mortgage.  Being able to qualify financially is often a challenge.  A reverse mortgage has relatively limited requirements for debt-to-income ratios.  If you are going back to a standard forward mortgage you will have to qualify based on DTI and other requirements.  You can also refinance a reverse mortgage (HECM) with another reverse mortgage. 

 
Question: Where can I learn more about how to get money to renovate my home and refinance my mortgage? 

DSW: Your local mortgage broker is typically going to be your best bet here.  Make sure you are dealing with someone that is somewhat experienced with this type of mortgage. 
 

Question: What are some advantages of going with a local mortgage broker over a national brand?  

DSW: For one, you will be supporting your local community.  Aside from that a good mortgage broker will be experienced, have multiple options to compare on your behalf and typically be more accessible.  I also am of the opinion that a local mortgage broker will most likely provide you with better service.  

Question: Do I need to worry about my credit score and DTI when applying for a mortgage refinance or a renovation loan? 

DSW: Yes, both of these types of mortgages will require the borrower to qualify based on certain requirements and guidelines.  There are some options with refinancing that can reduce these requirements.  The FHA streamline can be less restrictive along with the IRRRL for VA. 
 
To learn more about the different options available to help you to renovate your home, contact the home mortgage experts at Williamsport based Principle Home Mortgage today. They specialize in helping to guide their clients through each step of the mortgage process.