How does a VA Home Improvement Loan work?
Basically, a VA home improvement loan rolls the prices of home repairs either into a VA cash-out refinance or VA mortgage. It allows thousands of veterans and military service members to have their own homes every year. Another thing is that these loans don’t have down payments nor mortgage insurance and have lower mortgage rates compared to other home loans as well.
Other than those benefits, you can also use this loan to either renovate your existing home or buy a fixer-upper. Listed below are four VA home improvement loan options you can consider.
TGUC Financial can help you find a home improvement contractor as well as assist you with financing house improvements.
1. VA Renovation Loan
VA loans for alteration, repair, or renovations allow you to either refinance or buy a house, as well as rolling the cost of repairs and improvements into your mortgage.
You won’t be limited to homes that already meet the minimum property requirements of the VA using this option. This is because you can use the repair money to upgrade your home and meet the VA’s standards.
It might also be worth considering especially if your existing home requires some TLC. The loan amount usually can’t exceed the current value of the house if you’re going to use a VA cash-out refinance. However, the case is different with VA renovation cash-out refinance wherein the maximum loan amount is dependent on the possible value of the home after the repairs and renovations.
Keep in mind that lenders may charge up to 1% to 2% of the total VA renovation loan amount as a construction fee. This is in addition to the VA funding fee and loan origination charge.
2. VA Loan for Energy Efficiency
The cost of energy efficiency improvements can be included into a VA purchase or refinance loan. Improvements such as thermal windows, insulation, and solar heating or cooling systems are acceptable for this loan. The amount of all the necessary paperwork is determined by the overall cost of the project.
Around $3,000 and below: The VA expects that any drop in your utility bills will counterbalance the price of improvements.
Above $3,000 up to $6,000: The lender will review your plans first in order to ensure that the increase in monthly mortgage payments won’t be exceeding the estimated reduction in monthly utility bills.
Above $6,000: The loan will be examined or inspected by a lender and will be needing a “VA certificate of commitment”.
3. VA Cash-out Refinance
With a VA cash-out refinance, you might be able to borrow against the home equity that you have in your home. Cash-out money can be used for any purpose and that includes home improvements. Furthermore, with this loan option, you can also have a conventional or FHA loan refinanced into a VA-backed mortgage.
4, Supplemental VA Loans
This option is another way to assist you in financing home improvements. Your house must be financed with a VA mortgage first in order to be qualified. This loan can be used as a second mortgage, included in a refinance, or added to the existing mortgage. The money can be used for projects that improve your home’s livability, except for fancy extras such as swimming pools.
A “statement of reasonable value” signed by a VA-approved appraiser will be required if the cost falls below $3,500. A compliance inspection and a “notice of value” statement will be required by the lender in cases where the total cost of improvements and repairs exceeds $3,500.
TGUC Financial Home Improvement Loans
A VA home loan isn’t always the best option. TGUC Financial can help you find a home improvement contractor as well as assist you with financing house improvements. TGUC Financial has loan opportunities for homeowners across the credit spectrum. If you are a homeowner and you need a home improvement loan, we can compete with other financial institutions and offer you a loan. Whatever your credit score, contact us today.