A Good Idea and More Affordable Than You Think!
Home improvement projects have been on the rise every since the pandemic a few years ago. There are many good reasons for upgrades, remodels, additions, and even separate small homes on the same lot. However, a major obstacle is how to finance them. The Hartford Courant ran two articles of interest here. The first, from the New York Times, is about accessory dwelling units, or ADUs. The second article, from Bankrate, is about RenoFi, a new way to pay for renovations. The links to each of these articles are at the end of this blog.
Why Consider an ADU?
ADUs are any type of secondary living unit built on the same property of an existing home. I wrote more about ADU’s in a previous blog highlighting the apartment that I built in my own home (https://villagebuildingandrestoration.com/need-extra-space-or-extra-cash-consider-an-accessory-dwelling-unit/). While they have been around for some time, ADU’s are becoming more popular and are seen as one solution to housing problems for family members (young and old) who are in transition or priced out of the housing market. In most towns ADU’s can also be rented out as a source of income.
The benefits of an ADU are many. In addition to a potential source of income, they are less expensive than buying a second property or the cost of a nursing home for parents. They can also serve as a living space for live-in help or as a home office.
RenoFi Might be Your Financing Solution
As a rough estimate, building costs can vary from $160,000 to over $400,000. Most people finance home renovations with a home equity loan or line of credit, but with a project of this magnitude they may not have enough equity. The second article discusses a new alternative solution: RenoFi. RenoFi is a company that partners with local credit unions to offer loans specifically for renovations. The difference between a RenoFi loan and a home equity loan is that the RenoFi loan uses the expected value of your home AFTER the renovation – so you can borrow up to 90% of the after-renovation value. To see how this works, go to their website: https://www.renofi.com/
References:
https://www.nytimes.com/2021/02/05/business/accessory-dwelling-units-parents.html?smid=url-share
https://www.bankrate.com/loans/new-type-of-home-equity-loan-caters-to-major-renovation-projects/