Real Estate Financial Models

This model describes refinancing options with a renovation loan. Refinancing with a renovation loan is a way to borrow money for home improvements at a lower interest rate than personal loans or credit cards. And instead of paying back a separate loan, the costs of your updates are rolled into your new mortgage payment.

Refinancing with a renovation loan is a way to borrow money for home improvements at a lower interest rate than personal loans or credit cards. And instead of paying back a separate loan, the costs of your updates are rolled into your new mortgage payment.
With a renovation refinance, improvement costs become part of your new mortgage amount. Because rates are at or near record lows, this could mean borrowing more without drastically changing your monthly mortgage payment. While it may not compare to a credit card with a 0% introductory APR, a renovation refinance gives you a higher borrowing limit. And you'll pay much less interest than you would on a personal loan for the same amount of money.
A smart renovation can boost your property's value — and it isn't all about curb appeal or gourmet kitchens, either.
The remodeling Industry found that replacing outdated heating and cooling systems or upgrading insulation offered some of the best returns on investment when it came time to sell, for example. In the meantime, such updates could result in a more comfortable home and lower utility bills.
And, unlike a cash-out refinance, a renovation loan may expand your budget by allowing you to borrow against the home's expected value after improvements are complete, rather than its current value. Similarly, you may be able to take advantage of a renovation refinance even if you haven't owned your home long, since these loans require less equity than a cash-out refinance, home equity line of credit or home equity loan.