It’s easy to get excited about a remodeling project. After all, you’ve been dreaming about a major renovation for quite some time now. You finally have the chance to correct all the things that have been driving you nuts and make improvements that will change how you live dramatically.
There’s something almost refreshing about a major home remodeling project. Not to mention, it can increase the value of your home significantly. However, before making any structural or design changes to your home, you need to consider the costs. If your project includes more than buying new kitchen cabinets or new drapes, then you’ll need the services of an architect.
One of the most asked questions we get is if architectural fees can be included in a home mortgage.
Here’s what you need to know about the issue.
Most of the times, you aren’t allowed to include the architectural fees under your primary mortgage. You can, however, refinance your home or take a second mortgage against the equity in your home to make the changes you want. This option will allow you to include any architectural fees too.
One the other hand, if you own land and hire an architect to build a home, then the architect’s fees will be included in the costs of the house from the beginning. This situation is entirely different from taking a primary mortgage on an already existing home, so you need to make sure that you understand this important distinction.
If the legal aspects of property transactions are too confusing, then it’s best to work with and experienced property team, such as Russells.co.uk. They can provide expert advice and guide you through the complicated world of real estate.
Another way of financing a home remodel is by taking a construction loan. A construction loan is different than a mortgage in that the bank lends you money for the renovation of an existing property or the construction of a new house. The lender takes into account all the costs, from the value of the land to the cost of building to home, to determine the amount of money it will borrow you.
Construction loans include both hard and soft costs. Architectural fees fall under the category of soft costs while the building materials and construction process are considered hard costs.
What You Need to Know
Although construction loans might seem like the best solution, there are a few things that you should consider. For example, these types of financing are short-term – six months or less. You will need a valid construction/renovation contract with all the important details, such as costs and timeline already set. You will also need to present the lender the final plans and specifications for your home remodel.
Each lender has its policies. While some will allow you to combine your construction loan into a mortgage, others have different stipulations. Your best option, in this case, is to shop around and pay close attention to every detail before making a decision.
It’s a good idea to discuss with someone who understands the ins and outs of the real estate market before you make any big decision. A pro can show you options you never knew you had before. Then, you can go forward with peace of mind.