RenoFi - Renovation Home Equity Loan FAQs

Question 1

How is a RenoFi Loan different from a normal home equity loan or HELOC?

Accepted Answer

A home equity loan or home equity line of credit (HELOC) allows you to borrow against the current value of your home, whereas RenoFi Loans allow you to borrow against the after renovation value, or future value of your home. For homeowners who have been in their homes for 10+ years, borrowing against current home equity is fine because they’ve built up a lot of equity over the years and don’t have as large of an outstanding mortgage balance. But for recent homebuyers, a true renovation loan often offers higher borrowing power. It is important to note that if you take a RenoFi Loan there is no guarantee your home will increase in value and, in rare cases, you may owe more than your home is worth.

Question 2

How is the after renovation value of my home determined?

Accepted Answer

After renovation value is the estimated value of your home after your renovation is complete. You can estimate your after renovation value by using the current value of your home, plus the added value of your planned renovations. Homeowners can borrow up to 90% of their home’s after renovation value through a RenoFi Loan. You can find out your home’s after renovation value by getting an “as completed” appraisal on your home. This appraisal is based on the proposed renovation plan, on the condition that it is completed. Read more about how the after renovation value is determined here.

Question 3

How much can I borrow?

Accepted Answer

Lenders base this on several different metrics including your current home value, your home’s estimated “after renovation value,” your outstanding mortgage, and your overall financial health. Most lenders allow RenoFi Loans up to $500k, though please note that loans over $250k will have stricter qualification criteria. Additionally, most lenders allow homeowners to borrow up to 125% of the current home value and up to 90% of the after renovation value. Try the RenoFi Loan calculator to see how much you can borrow.

Question 4

Are the rates fixed or variable?

Accepted Answer

The lenders that we work with currently offer variable HELOC rates, as well as fixed and variable home equity loan rates, depending on your location and project. Fixed rate home equity loans are not available in all states. If you’re not sure which of these you’re interested in, click here to learn more about the different options that may be available. Get connected with a RenoFi advisor to learn more.

Question 5

Why RenoFi and not go straight to the lender?

Accepted Answer

RenoFi’s services are free for homeowners, whether you decide to move forward or not. You can't obtain a RenoFi Loan without working with RenoFi first. We partner with specific credit unions to offer the RenoFi Loan, but our RenoFi team will do everything to prepare you to apply before handing you off to the credit union. You can look at us as a concierge, who will walk you through the journey of considering and then preparing for a renovation.  Banks love us because they prefer to work with educated consumers. After our process, you’ll be ready to rock and roll with your lender. Our RenoFi advisors are seasoned experts that will guide you through finding the best financing option for your renovation project, regardless of whether or not you decide to apply for a RenoFi Loan with one of our lending partners.

Question 6

Can I use a RenoFi Loan on a home I am about to purchase?

Accepted Answer

Yes. We can work with you before closing on a home to gather as many necessary documents as possible, so that as soon as you close, we have all documents needed to send the application along to our lending partner.  Remember, you should let your proposed lender know before you close if you are sure that you will be applying for a RenoFi Loan.

Question 7

What are the fees/closing costs?

Accepted Answer

Lenders offering RenoFi Loans may charge fees as they would for any home equity loan. Fees for RenoFi Loans typically average around $495, which includes all processing and underwriting costs paid by the consumer to the partner lender other than the cost of the appraisal. Your appraisal will range in cost based on renovation size, complexity, and geographic location. Most of the appraisals we facilitate on behalf of the lenders are under $500. It is important to note that the lender is taking the application and making a loan decision and that it is possible that you pay for an appraisal and are not approved for a loan. During the renovation, some lenders may charge a monthly fee or a higher rate, but this is temporary and will cease once the renovation completes and RenoFi issues a certificate of completion.

RenoFi provides lenders with our Renovation Underwriting services. These services include a thorough review of the renovation project cost and scope, due diligence on the contractor, reconciliation of the appraisal and monitoring of renovations in progress. As such, if you decide to proceed with a RenoFi Loan, we will be paid for these services by the partner lender. RenoFi doesn’t charge any fees to homeowners and there is no obligation to obtain a RenoFi Loan.

Question 8

What do I need to have ready in order to apply?

Accepted Answer

There’s lots of documentable information related to your home, your income and your general financial situation that you need to have ready before you apply with a lender. If you’re interested in applying for a RenoFi Loan, we recommend reading this checklist, as well as the Top 10 Reasons Homeowners Can’t Qualify for a RenoFi Loan article.

	Renovation loan	Standard Home Equity Loan	Construction Loan	Personal Loan
Loan based on the after renovation value	Yes	No	Yes	No
Borrow up to 90% post reno CLTV Combined Loan To Value ratio Simply put, it’s the sum of all outstanding loans on a property divided by the after renovation value of that property and displayed as a percentage. Example a) Current mortgage balance b) Renovation loan amount $180,000 $60,000 c) After renovation value (a + b) / c = CLTV $300,000 CLTV = 80%	Yes	No	No	No
Refinance required	No	No	Yes	No
Requires inspections & draws	No	No	Yes	No

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(Villanova, PA)

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