By Noah Brocious – President/RI/Mortgage Loan Originator – So you’re thinking about remodeling your home. Perhaps the kids have all moved out, you’re looking to sell your house, or you’re a property investor trying to profit on a rundown venture. No matter your reasons, you’ll need funds to get your project up and running. However, most people don’t have that much cash floating around. Instead, they have equity in their property and other assets. How can you access this value to put towards renovations?
Renovation Loans from Capital Fund 1
Fortunately, there are many remodel loans specifically designed to provide fast, easy cash. Offered by Hard Money lenders, these loans don’t require you to jump through hoops like a mortgage or home equity loan. Instead, you can get approved and funded within days.
Of course, there are many types of Hard Money financing in Arizona. Which one will best fit your needs? To help you out, here’s a breakdown of the most common renovation loans.
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Cash-Out Refinance
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- If you already have a loan on your property or other assets, consider a cash-out refinance. This type of refinancing allows you to take out a more substantial amount than you have to remain on the current loan, with the difference going directly into your pocket. The most important thing to know about this type of financing is that your assets’ equity must exceed the amount you owe. Otherwise, there won’t be anything to “cash out.”
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- However, if equity is available, this may be a better option than applying for a new loan. It keeps your debt consolidated and allows you to keep one monthly payment instead of trying to juggle multiple.
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Fix and Flip
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- If your significant home remodel is for an investment property, you can benefit from a fix and flip loan. This financing is specially designed for investors who intend to renovate properties for a quick sale.
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- Keep in mind that fix and flip loans are meant to cover both the purchase and renovation of a property. That means that if you already have a home you’re interested in renovating, this loan isn’t for you. However, if you want to create an income property, this may be the perfect option.
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- Fix and flip loans are specifically quick and flexible to accommodate the many needs of Arizona investors. Depending on the lender, you may be able to use the investment property as collateral or another asset you already own.
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Bridge Loan
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- When funding significant home remodels with the intent to sell, you may consider a bridge loan. Also called hard money loans, this type of financing is speedy to process; in some cases, you can get approved in as little as one day. It’s also very short-term, usually lasting no more than two years since it’s meant to “bridge” a temporary gap between funds.
- The one thing to keep in mind is that bridge loans can have higher interest rates than traditional financing, so it’s in your best interest to pay them off as soon as possible. With that in mind, if you’re looking to stay in your home, a bridge loan may not be the best solution; on the other hand, if you’re trying to spruce things up before selling, it could be just what you need.
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Alternative Renovation Loan
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- Finally, there’s the alternative renovation loan. This hefty source of funding can cover the cost of additions, permits, inspections, and other little expenses that add up when undertaking a major home remodel. If your primary goal is to increase your home’s value, this type of funding, maybe your best option.
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- Alternative renovation loans may be especially useful to property investors; to turn a profit, you need to increase a property’s value somehow. This type of financing allows you to essentially remake even the most dilapidated building by covering the following:
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- Replacing interior walls
- Adding square feet
- Altering floor plan
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- So how does this financing differ from a fix and flip loan? Flipping a house is meant to happen within a short period — typically six months to a year. However, big changes, such as adding another bedroom or knocking down a wall, take longer. An alternative renovation loan gives you a longer timetable to truly transform a property.
Contact Capital Fund 1
If you’re seeking to remodel loans in Arizona, Colorado, Oregon, or Texas, Capital Fund 1 can help. We offer a variety of financing options with short application processing times. We don’t make you jump through hoops, which is why you can have cash in hand as quickly as 24-hours. To find out more or submit your application, give us a call at (480) 889-6100 or contact us online.
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Photo Credit: fizkes