Homeowners often reach a point when their home no longer meet their needs. For instance, those with a growing family may find that they’re running out of space. While moving may seem like a simple solution, this isn’t always ideal. For example, the homeowners may reside in a very desirable neighborhood that doesn’t have a lot of houses for sale. The homeowners may have also secured an extremely low interest rate on their current mortgage, making a move very expensive if they have to refinance at a higher rate. Whatever the reason, when homeowners decide that moving isn’t an option they can opt for a home renovation to expand or reshape their current living space to meet their needs. This can be done by securing financing.

Step 1: Identify your options

Homeowners can either look into the local bylaws to determine whether it is possible for them to build an addition to their home or they can hire professionals to do this for them. While city or municipality bylaws will apply, homeowners may also be subject to Home Owner Association (HOA) bylaws, which should be explored in the early stages of this process. It is important to know what is feasible from the start, because you do not want to spend money having designs drafted without being certain that expanding is an option.

Step 2: Identify your needs

You need to determine how you need your space to expand or change. Having a list of priorities for renovation or expansion is essential when it comes time to dealing with building and finance professionals. Dividing your list into must-haves and nice-to-have options is a good idea because it will help ease the process when it comes time to make decisions.

Step 3: Identify your home’s potential value

Once you know what you need, you can contact professionals, such as custom home builders in Pennsylvania, who can develop estimates for the renovations you’re planning and help you determine what on your lists is feasible within your proposed budget. This will enable you to have an appraiser evaluate your home’s potential worth with the completed renovations. This is crucial information that will enable you to secure financing because lenders for remodeling typically base the amount they will finance off of your home’s projected worth after the renovations.

Step 4: Identify financing options

There are a number of different options for financing a remodeling project, including how to refinance a home loan with bad credit. This means that even homeowners who’ve had some financial difficulties will find that there are ways to secure financing. Homeowners can explore different loan types, such as home equity loans or FHA (203k) loans. It’s also possible to take out a line of credit based on your home’s equity. Every loan has different requirements, so the homeowner must determine if they meet them.

Step 5: Identify lenders

When you’re buying a house it’s important to shop around to ensure you get the best interest rate, and this can apply to securing a renovation loan as well. Banks and credit unions may offer options for different loans and have different interest rates or perks that apply. Doing advance research and knowing your financing options can help ensure that you ask the right questions and get all the information you need for each financing method. It’s also important not to settle. Seeking information from several lenders may be time-consuming, but it will ensure that you have the information you need to ensure you get the best loan and rate for your project.

Step 6: Identify your resources

Loans for renovations do not have to come from banks or credit unions alone. Individuals can opt to borrow against their 401(k), although personal financial advisors may not recommend this option. Another possibility is securing a personal loan or using your savings. 

Step 7: Identify your choice

Thorough research will help you determine which options you are eligible for and which will be the most affordable in the long run. This can help you make the best choice when it comes time to finance your home renovation.