There’s lots of information floating around about lending and credit. What’s wrong? What’s right? What’s the real story?

If you’re thinking about a home renovation, but wondering about the financing, talk to Chase Bank’s Arthur Haan, our SGR partner. The combination of Chase’s competitive products and pricing, along with Art’s 17 years of experience could help to turn your dream into reality. Read on for his insight.

Remodeling Financing / A New World Order
Arthur Haan

Financing for remodeling projects is alive and well despite the headlines regarding the current ‘credit crises.’ Lending has changed its look recently, but mortgage financing is still widely available for the majority of projects.

Construction/Permanent mortgage is one of the more popular remodeling financing options. This transaction allows a customer to finance both the remodeling project and existing mortgage into one loan. The magic of this arrangement, it allows financing up to 95% of the as-improved value of the property. By combining both the construction loan and mortgage into one transaction, there’s savings of fees and redundancy in paperwork. It is one of the most cost-effective methods to finance projects of $50,000 or greater.

Home Equity Financing is still available, but now is a shadow of what it once was. As home values fall nationally, lenders are reducing the amount of money they are willing to lend per home. Many lenders conclude they are unwilling to lend more than 85% of a home’s current value. This is a stark contrast to the 95% to 100% of value that was prevalent a year ago. Although still viable, Home Equity products are best suited to smaller projects of less than $50,000.

Arrange financing before the project starts. Eliminate the unknowns, such and appraisal and approvals, to reduce anxiety. Some lenders and title agents will be reluctant to lend or insure a partially-completed project if you start financing after the project starts.

Borrow more than you think you will need. It's better to have available funds you don't use instead of thinking of things you want to add during the project and no money.

Choose a lender who specializes in Remodeling Financing. Be sure a lender has experience providing credit based upon the as-completed value of a property.

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