Qualifying for a Phoenix home renovation loan is fairly simple. In fact, it’s the wide range of options for renovation loans in Arizona that make the process cluttered and difficult. But it doesn’t have to be a strenuous process! Cling to these three questions to start with clean, efficient navigation.

Renovation Home Loans 3-step Guide

  1. How much money do I need and how much can I get right from the start?
  2. Which options match my needs and finances?
  3. Which lenders are most likely to give me my ideal loan?

Let’s break down these three points.

  1. How much money do I need and how much can I get right from the start?

Know exactly how much you need and allow for margins of error throughout the renovation project. This is important for you to know when loan hunting, but it’s also going to be vital as you coordinate contractors for your work. If you plan to do the work yourself, allow for costs of materials, permit fees and equipment rental or purchase. If you are hiring out, make sure that a contractor will accept your work bid price.

Now you know what you need, how much can you get? Here’s where your credit rating comes into play. Hopefully, you’ve been working on building credit and avoiding dings. If you haven’t been doing this independently, your loan agent can help identify where you are falling short on your credit and how to improve it.

Then enters the loan-to-value ratio (LTV). The limit is about 80 percent of a home. If you’re looking at a renovation that costs more than 80 percent of the value of your home, you might run into a problem. It is possible to get a loan at a higher percentage, but your interest rates and fees will likely rise significantly.

Once your LTV is determined, your income steps in to determine what your monthly payment will be. The goal here is for your bills and debt to fall below 36 percent of your gross monthly income.

Once you know these numbers, find out which loans suit them.

  1. Which options match my needs and finances?

Now you need to research which types of loans accommodate your needs and current situation. Maybe you need to re-evaluate your project costs, extend the timeline, or settle for a loan that allows you to complete your project on time at a higher interest rate. Options for renovation home loans in Arizona range in the 200s, so understanding which needs are most relevant to you should even further narrow down your choices.

Finally:

  1. Which lenders are most likely to give me my ideal loan?

Research which lenders most commonly deal with the type or types of loans you are pursuing and start by contacting them.

Hopefully, your search for your a Phoenix home renovation loan leads you to Nova Home Loans and we can work toward your dream home together!