Finding your dream home isn’t always as easy as we’d like. Sometimes, you find the perfect neighborhood, but it’s lacking the perfect home. Or that perfect home is just a tad out of your price range. When you’re stuck having to choose between the items topping your dream home wish list, a renovation project can be a great solution to get everything you want.
That was the case for this Chicago homeowner who loved their upscale property’s location, but also wanted a larger living space to enjoy with loved ones. Through a recent renovation project, they got the added family space they wanted AND achieved a large ROI — thanks to a RenoFi home equity line of credit!
Are you about to take on a home renovation project? If so, learn more about this homeowner’s journey, and then check out more of our loan case studies for real world examples of how our homeowners are achieving greater borrowing power with RenoFi loans.
About the Renovation Project
This homeowner found a home in a prime location of Chicago, Illinois. It was in a great school district, just blocks from transportation, entertainment, and lots of wonderful retail and dining. The home’s interior was even the right size for their family, boasting 5 bedrooms and 3.5 bathrooms and luxury living, but it lacked the traditional family room space right off the eating area. So instead of moving, they decided to renovate.
Their plan was to open up the eating area to offer more space and functionality AND redo the outside deck off the kitchen to gather, eat, and entertain family and friends. But they were also mindful in preserving a backyard play area since it was such a highly valued attribute in a crowded city.
Terms of the RenoFi HELOC
So when it came time to finance the project, they considered a traditional HELOC, but this option would only allow them to borrow against the current value of your home. They then came across a RenoFi HELOC, which would allow them to borrow against the after renovation value, or future value of their home.
With their home’s prime location, the homeowner knew the renovation would likely increase the future value of their home even further, so choosing to go with the RenoFi HELOC would help them achieve a good return on investment.
While their combined-loan-to-value (CLTV) ratio was 82.61%, their after renovation value (ARV) CLTV was 74.35%, reducing their risk factor in the eyes of lenders. If the homeowner were to borrow based on their current home value, the max loan amount they could borrow would have been $716,900. And their renovation cost vs. current value ratio was 13.51%.
Are you now curious if you would be eligible for a RenoFi HELOC? Check out some of these homeowner’s statistics to see how you compare:
- DTI Score: 33.2%
- Credit Score: 743
- Monthly Income: $23,338
Additionally, the homeowner had about $7,746 in monthly debt, but also $113,000 worth in assets. And with a mortgage balance was $689,342, they were able to qualify for the following rates:
- As low as rate of 4.750%
- Actual loan rate of 5.75%
Six-Figure Renovation Value
Despite going into the project thinking their home’s value was $900,000, an appraiser confirmed the actual value at $1,125,000. And when the whole project was said and done, the renovation value was a total of $151,974.
Despite a large price tag for the project, the homeowners were able to see huge returns on investment with the help of RenoFi:
- Estimated after renovation value $1,050,000
- Actual after renovated value $1,250,000
- Estimated ROI 98.70%
- Renovation ROI 82.25%
They increased their home’s value by $200,000, bringing their total renovation ROI to 82.25%! They successfully achieved the beautiful open family area and outdoor entertaining space they wanted, while maximizing their investment for years to come. If this story has inspired you to look into a RenoFi loan for your renovation project, contact us today to learn more! RenoFi is excited to help more homeowners like you renovate your dining area or deck to turn your house into a home you love!
