Planning a Renovation? Here’s How to Get the Funds You Need

If you’re buying a home that needs repairs or remodeling, you probably want to tap into your home’s equity. But did you know most standard cash-out refinances come with a 12-month “seasoning” requirement? This means you need to own the property (and maintain the mortgage) for at least a year before you can refinance and pull out cash. Here are four ways to stay ahead of the game and keep your renovation plans on track.

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1. Get the Most Financing Up Front

One option is to borrow as much as possible when you first purchase the home. Even though this might mean a larger loan balance and monthly payment, it allows you to keep more of your personal savings available for updates. This approach ensures you have the funds in hand—rather than waiting a full year to do a cash-out refinance.

Why It Helps

• Reduces the risk of running short on renovation funds.
• Eliminates the need for a second loan if costs go higher than expected.

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2. Explore a Construction/Renovation Loan

A construction or renovation loan can bundle renovation costs and home financing into one package. This specialized mortgage allows you to borrow against the future (post-renovation) value of your home, giving you more leverage to fund big projects.

Why It Helps

• A single, streamlined loan process for buying (or refinancing) and improving your home.
• Potentially less red tape than juggling separate loans or credit lines.

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3. Plan for a HELOC

A Home Equity Line of Credit (HELOC) lets you draw from your home’s equity as needed. While you might have to wait until the renovation is done or your home appreciates, the process can be completed with 12-months of the original loan acquisition date.

Why It Helps

• Only borrow what you need (and pay interest on that amount).
• Can be set up relatively quickly, without replacing your main mortgage.

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4. Wait Out the 12-Month Seasoning

If you’re not in a rush, simply wait the full year for a standard cash-out refinance. This can allow you to take advantage of potentially better terms, or if your home’s value climbs post-renovation, you’ll have even more equity to tap.

Why It Helps

• May qualify for more competitive rates and terms.
• A straightforward path if you can handle a delay.

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Bottom Line
Renovation financing doesn’t have to be complicated, but planning ahead is key. Whether you choose maximum financing up front, a construction loan, a HELOC, or simply wait out the year, each path has its pros and cons. Talk with a knowledgeable mortgage professional to find the option that fits your financial goals and renovation timeline. If you have questions about your specific scenario, feel free to reach out for personalized guidance.