Important Tips on Financing a Home Build or Remodel

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Written by: Aaron Miller, SVP, Mortgage Production Director
Couple looking at blueprints in room being remodeled

Building or remodeling a home is an exciting project, yet it can be daunting. From finding the right contractor to picking out plans, and from selecting the right finishes to setting a budget—there’s lots to “get right” before the first nail is pounded.  

Begin with securing the right financing. With many financing options to choose from today, how do you know which one is right for your project?  

TIP #1: Start by sitting down in person with more than one lender. This is an important project so it’s worth it to take your time to review your options and ask many questions. Don’t be rushed. If a lender doesn’t have time for you at this stage, that’s a red flag.

TIP#2: Arm yourself with knowledge. If you are remodeling and have adequate equity in your home before the project begins, a Home Equity Line of Credit (HELOC) may be right for you. Typically a variable-rate HELOC is good for fast, short-term financing, and it’s a minimal cost to get started. 

TIP #3: No equity? An “all-in-one” or “single-close” loan may be a better fit because the future value of the improvements are used to establish how much you can borrow.  

TIP #4: If you are building, a HELOC is probably not an option. Instead, consider the single close or a two stage option that provides you with a line of credit to make improvements later on.  

Whatever you choose, keep an eye on several important factors:

  1. Understand your options for fixed- and variable-rates
  2. Know all costs and fees
  3. Know how long you have to complete the project
  4. Understand how the inspections for draw disbursement will be handled

Building or remodeling your home can be a great experience, but just like your house, this project requires you start with a good foundation—financing.

Learn more about home lending options with Banner Bank.