Let’s say that you found a home that is perfect except for the kitchen. You really want this home but after you buy the house you won’t have enough cash to renovate the kitchen. A renovation loan could be the perfect solution to this scenario.
A renovation loan is one in which a bank will issue you a mortgage to purchase a home based on what that home will be worth after the renovation is complete. You get cash at closing that to be used to complete the renovation within a predetermined amount of time. This type of loan is also great for homes that couldn’t otherwise be financed due to its condition, such as if it has a roof at the end of its life.
Check out the following website for a description regarding the various types of renovation loans and the pro’s and con’s of each.