Avenue Mortgage, LLC

NMLS #1115220

  • Home
  • About
    • About Kay
    • Accessibility Statement
    • Complaint/Recovery Fund Notice
  • Blog
  • Our Resources
    • First Time Seller Tips
    • First Time Buyer Tips
    • Home Appraisal
    • Home Inspection
    • Loan Checklist
    • Loan Process
    • Loan Programs
    • Mortgage Glossary
    • Mortgage FAQ
    • What to Expect at a Loan Closing: A Step-by-Step Guide
  • Our Reviews
  • Contact Us

Can I Finance Home Renovations Into My Mortgage at Closing?

April 25, 2025 by Kay Monigold

Purchasing a home that needs renovations or upgrading your current home can be costly, but financing home improvements through your mortgage can be an effective solution. Instead of taking out a separate loan for renovations, some mortgage programs allow you to roll the cost of home improvements into your home loan at closing. This strategy can help you spread renovation costs over time while securing a potentially lower interest rate compared to personal loans or credit cards.

How Financing Renovations Into Your Mortgage Works
When you finance renovations into your mortgage, the loan amount includes both the purchase price (or refinance amount) and the estimated cost of home improvements. The lender typically requires contractor estimates for the work, and funds for renovations may be placed in an escrow account and disbursed as the project progresses.

Loan Options for Financing Home Renovations
Several mortgage programs allow borrowers to finance home improvements at closing:

FHA 203(k) Loan—This government-backed loan is ideal for buyers or homeowners who want to finance major renovations. It comes in two options:

  • Limited 203(k) Loan—Covers minor repairs and upgrades up to $35,000.
  • Standard 203(k) Loan—Designed for extensive renovations, requiring a licensed contractor and consultant oversight.

Fannie Mae HomeStyle Renovation Loan—Available for both homebuyers and homeowners, this loan allows you to finance nearly any type of renovation, including luxury upgrades. It requires a higher credit score but offers competitive interest rates.

Freddie Mac CHOICERenovation Loan—This program offers flexible financing for home improvements, including repairs to protect against natural disasters, with options for borrowers to complete some work themselves.

VA Renovation Loan—Eligible veterans and service members can finance renovations through their VA loan, though restrictions apply, and lender participation is limited.

Conventional Cash-Out Refinance—Homeowners with existing equity can refinance their mortgage for a higher amount and use the extra cash for renovations.

Benefits of Financing Renovations Into Your Mortgage

  • Lower Interest Rates—Mortgage rates are typically lower than personal loans or credit cards, making this a cost-effective option.
  • Single Loan Payment—Instead of managing multiple loans, you have one mortgage payment covering both the home and renovations.
  • Increased Home Value—Renovations can boost your property value, potentially improving your home s long-term equity.

Considerations Before Choosing a Renovation Mortgage

  • Loan Requirements—Some programs require higher credit scores or contractor oversight.
  • Project Scope and Costs—Lenders may require detailed renovation plans and cost estimates.
  • Disbursement Process—Funds are often released in stages, which can impact project timelines.

Financing renovations through your mortgage can be a smart way to improve your home without taking on additional debt. Whether you re purchasing a fixer-upper or upgrading your current home, exploring renovation loan options can help you achieve your goals while maintaining financial stability. Consulting with a mortgage professional can help you determine the best financing solution for your needs.

Filed Under: Home Buyer Tips Tagged With: Home Buying, Home Renovation, Mortgage Tips

What Every Buyer Should Know About Home Appraisals

April 18, 2025 by Kay Monigold

Buying a home is an exciting yet complex process, and one critical step often catches buyers off guard—the home appraisal. This professional evaluation determines the fair market value of a property, ensuring that both you and your lender are making a sound investment. Understanding how appraisals work can help you navigate this stage with confidence and avoid potential roadblocks.

What Is a Home Appraisal?

A home appraisal is an unbiased, professional assessment of a property’s value, conducted by a licensed appraiser. Mortgage lenders require an appraisal before approving a loan to confirm that the home’s value aligns with the purchase price. This step protects both the buyer and lender by ensuring the property isn’t overpriced.

Why Do Appraisals Matter?

  • Protects the Buyer: If an appraisal comes in lower than the agreed-upon price, it prevents you from overpaying and gives you leverage to renegotiate.
  • Protects the Lender: The home serves as collateral for your mortgage, so lenders need to verify its value before approving a loan.
  • Aids in Financial Planning: A fair valuation helps you assess the property’s future resale value and long-term investment potential.

When Does the Appraisal Take Place?

Once your offer is accepted, the lender will schedule an appraisal before closing. While the lender arranges it, the buyer usually covers the cost, which typically ranges from $300 to $600.

The Appraisal Process: What to Expect

  1. Property Inspection – The appraiser visits the home to evaluate its condition, size, layout, and key features, including any upgrades.
  2. Comparative Market Analysis (CMA) – They research similar recently sold properties (called “comps”) in the area to gauge market value.
  3. Market Condition Evaluation – Factors like neighborhood trends, school districts, and overall real estate market performance are considered.
  4. Appraisal Report – The appraiser compiles a detailed report, which includes:
    • The estimated market value of the home
    • A breakdown of the property’s condition and features
    • Comparable property sales used in the valuation
    • Any factors affecting the valuation

What Happens If the Appraisal Is Lower Than the Purchase Price?

A low appraisal can complicate your home purchase, but you have several options:

  • Renegotiate the Price – Ask the seller to lower the price to match the appraised value.
  • Cover the Difference – If allowed by your lender, you can pay the gap between the appraisal and the purchase price out of pocket.
  • Dispute the Appraisal – If you believe the appraiser overlooked important details, you can request a review.
  • Walk Away – If your contract includes an appraisal contingency, you can exit the deal without penalty.

How Buyers Can Prepare for an Appraisal

  • Research Local Market Trends – Understanding recent home sales in the area will help you set realistic expectations.
  • Attend the Appraisal (If Possible) – While not mandatory, being present can provide insight into how the appraiser evaluates the home.
  • Stay Calm – A low appraisal isn’t always a deal-breaker. There are ways to resolve the issue and keep your home purchase on track.

A home appraisal is a vital part of the buying process, ensuring that you’re making a smart investment. By understanding how it works, what factors influence the outcome, and how to handle potential challenges, you can move forward with confidence. Whether the appraisal confirms your purchase price or presents a hurdle to overcome, being informed will help you make the best decision for your future home.

Filed Under: Mortgage Tagged With: Home Buying, Mortgage101, Real Estate Tips

Next Page »

Our Team

Kay MonigoldKay Monigold
Owner/Mortgage Broker/Residential Mortgage Loan Originator
NMLS#1086176

Ron MartinRon Martin
Residential Mortgage Loan Originator

NMLS#316821

Steven LoweSteven P Lowe, Sr
Residential Mortgage Loan Originator
NMLS #1085638

GET A RATE QUOTE →

Connect with Us!

Browse Articles by Category

Accessibility Statement

We are committed to ensuring that its website is accessible to people with disabilities. All the pages on our website will meet W3C WAI’s Web Content Accessibility Guidelines 2.0, Level A conformance. Website Accessibility Policy

Equal Housing Lender


100 Independence Place, Ste. 308
Tyler, TX 75703
nmlsconsumeraccess.org

Quick Links

  • About
    • About Us
    • Texas Complaint/Recovery Fund Notice
  • Get a Rate Quote
  • Resources
    • Loan Process
  • Contact Us

Copyright © 2025 · Powered by MySMARTblog

Copyright © 2025 · Genesis Sample Theme on Genesis Framework · WordPress · Log in