Sitting down with my clients and reviewing their options is something I enjoy. I love helping people develop a creative solution for attaining their goals: it’s one of the main reasons I’ve stayed in this business for 16 years. 

A little creativity is essential because people don’t always get the news they want to hear. As an example, I recently helped my client Thomas and his wife Karen figure out how much money they would be able to finance toward the purchase of a new home.

“That’s not enough for where we want to be,” said Thomas, looking disappointed, “especially for something that’s in decent shape. I’m not all that handy, so we need to find a home where the kitchen and bathrooms are OK and the other fixes are just cosmetic.”

Learning more about renovation loans lifted his spirits. “With your budget, you could find something and still have $40,000 or more left over for renovations,” I said. “You can make a huge impact on a place with that much money. I mean, there are a lot of options out there. Searching the Internet for available properties is a bit of a hobby for me.”

“We could pick out the colors we want,” interrupted Karen dreamily, “and the design and the materials … plus we could have everything done before we even moved in right?”

“Yes, no need to live in a war zone,” I laughed. “The only catch is that the work has to be done by a licensed general contractor, and it has to be approved as a part of the loan before closing.”

There are many other products available for people who want to renovate. For borrowers that already own their homes, there are refinancing options that allow for renovation costs to be rolled into the loan. The upside to this, particularly for people with a limited amount of equity in their home, is that the loan amount is based on the value of the home after the improvements are made. These are available for conventional and FHA loans, with fixed or adjustable rates.

Folks with a bit more equity can choose from home equity lines of credit, home equity loans and cash-out refinancing products. The advantage to all of these, except for cash-out refinancing, is that the interest on the loans is usually tax deductible, unlike personal loans or credit cards. Of course, I am not a tax adviser and people should always consult an accountant before making this type of decision.

Cash-out refinancing could be advantageous if interest rates have dropped substantially since the last time the home was financed. This is a product that works well for people who intend to stay in their current home for the next few years.

The bottom line is that there are always options and a critical first step is to find the right mortgage broker. For a customized solution to fit your individual circumstances and goals, contact me at the number below.

Patrick Stoy has 16 years of mortgage lending experience. Patrick is CEO of Wilmington-based Market Consulting Mortgage, which he started in 2005 with a mission to build lifelong customer relationships by providing real value. To learn more about Marketing Consulting Mortgage, visit www.macmtg.com. Patrick can be reached at [email protected] or 910-509-7105.