Financing Options
There are more options than you may think!
As you get closer to deciding whether or not you would like to build an ADU on your property, one of the biggest questions that many homeowners have is “can I finance this? And if so, what are the options?” This is exactly where we can help!
Here are each of the main options available to you, but if you would like to quickly see what would be the best fit for you and get an idea of payments and terms, reach out today and our financing team can walk you through options.
Home Equity Line of Credit (HELOC)
In the current economic climate, a Home Equity Line Of Credit (HELOC) is the most common financing option that our current customers are using. This is a line of credit taken out based on the equity you have and broken into two pay periods, a draw period, and a payback period, and you are only charged interest on the amount of the loan that you use which you can draw from to pay for your project during a specific period, typically around 10 years.
The payments on this type of loan still come in far lower than what you can often rent it out for or the cost of housing an aging parent in an apartment or assisted living facility making this an incredibly affordable option!
The Anchored ADU Bridge Loan
We’ve developed a loan specifically for those that just don’t quite have enough equity in their home without the new value of the ADU being put on.
With this option, you can have the money for your ADU lent to you upfront and once the unit is built you then pay off this loan using either a cash-out refinance or HELOC based on the NEW value of your property! And to make it even better, once you get the loan rates are locked in so it won’t change on you and there are no payments during the duration of the loan!
Cash-Out Refinance
A cash-out refinance is very similar to a HELOC in that it is based on your current equity, but rather than being secondary to your mortgage, a cash-out refinancing replaces your current mortgage and you can use the difference that goes to you in cash as a way to pay for your ADU.
This is a great option if you have a lot of equity in your home and if your current interest rate is similar to or higher than the current going rate!
Renovation or Construction Loan
Unlike loans based on existing equity, a renovation/construction loan does not use your home as collateral so if you are wanting to avoid that or don’t have much equity then this may be a great option.
However, this does often have more strict credit and income requirements as well as a higher interest rate typically, making the monthly payment often higher than with other options.
Alternative Options
Beyond these traditional loans there are still a few other options that you can look into, including:
- A personal loan or line of credit
- Use of retirement accounts or personal investment
- Sale of another home or property
- Borrowing from family and friends
- Private money loans
- And more
Ultimately there are most likely many more options than you would realize as well as dozens of different lenders with different terms to help you get approved for the payments that work best for you and your goals!
Financing Options
There are more options than you may think!
As you get closer to deciding whether or not you would like to build an ADU on your property, one of the biggest questions that many homeowners have is “can I finance this? And if so, what are the options?” This is exactly where we can help!
Here are each of the main options available to you, but if you would like to quickly see what would be the best fit for you and get an idea of payments and terms, reach out today and our financing team can walk you through options.
Home Equity Line of Credit (HELOC)
In the current economic climate, a Home Equity Line Of Credit (HELOC) is the most common financing option that our current customers are using. This is a line of credit taken out based on the equity you have and broken into two pay periods, a draw period, and a payback period, and you are only charged interest on the amount of the loan that you use which you can draw from to pay for your project during a specific period, typically around 10 years.
The payments on this type of loan still come in far lower than what you can often rent it out for or the cost of housing an aging parent in an apartment or assisted living facility making this an incredibly affordable option!
The Anchored ADU Bridge Loan
We’ve developed a loan specifically for those that just don’t quite have enough equity in their home without the new value of the ADU being put on.
With this option, you can have the money for your ADU lent to you upfront and once the unit is built you then pay off this loan using either a cash-out refinance or HELOC based on the NEW value of your property! And to make it even better, once you get the loan rates are locked in so it won’t change on you and there are no payments during the duration of the loan!
Cash-Out Refinance
A cash-out refinance is very similar to a HELOC in that it is based on your current equity, but rather than being secondary to your mortgage, a cash-out refinancing replaces your current mortgage and you can use the difference that goes to you in cash as a way to pay for your ADU.
This is a great option if you have a lot of equity in your home and if your current interest rate is similar to or higher than the current going rate!
Renovation or Construction Loan
Unlike loans based on existing equity, a renovation/construction loan does not use your home as collateral so if you are wanting to avoid that or don’t have much equity then this may be a great option.
However, this does often have more strict credit and income requirements as well as a higher interest rate typically, making the monthly payment often higher than with other options.
Alternative Options
Beyond these traditional loans there are still a few other options that you can look into, including:
- A personal loan or line of credit
- Use of retirement accounts or personal investment
- Sale of another home or property
- Borrowing from family and friends
- Private money loans
- And more
Ultimately there are most likely many more options than you would realize as well as dozens of different lenders with different terms to help you get approved for the payments that work best for you and your goals!
Contact us to learn more about financing options
Ready to See if You Qualify?
Are you ready to see what financing options you qualify for and what the payments would look like so that you can get an idea of what would be the best fit for you?
Request a FREE property analysis and estimate TODAY and we will be able to go over more details with you as well as connect you with our financing team once we have analyzed your property and given you a firm estimate at no cost. This way you can have complete clarity on what the cost is and how that would break down into your payments.
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