Best Ways To Finance An ADU

Many homeowners in California dream of building and attached dwelling unit on their property housing. However, when it comes to financing that dream often hits a snag as obtaining financing i often the single biggest obstacle that prospective ADU builders face.

Here are main financing options for ADU Loans construction.

1. Cash-out refinancing: It works by refinancing your first mortgage to release some of the home equity that is built up, which can be used to fund the construction of ADU. This option allows the borrower to consolidate their ADU funding and mortgage into a single loan.

2. Renovation financing: A renovation loan is a kind of home equity loan, especially for home renovation projects. The renovation loan enables the borrower to take out a predetermined amount of money based on the equity of their home. It is based on the future value of your home once the renovations are complete.

3. Home equity loans and lines of credit: Home equity loans and the lines of credit let the homeowners borrow a predetermined amount based on the equity of their home. It allows the borrowers to access a portion of the equity they have accrued in their home in form of lump sum.

4. Home equity investments: Home equity investments make it possible for the borrowers to access their home equity without taking on debt. It has no out of the pocket costs and no monthly payments. The applications for home equity investments are approved in minutes and funded in just few weeks.

5. Local government grants and loans: California has created financial incentives for building ADUs to combat the housing crisis. They offer various grants and loan programs to make the development easier for home owners. CALHFA’s ADU program is created to give homeowners up to $ 40,000 for ADU pre-construction costs. For knowing about your local governments grants and loans programs, speak with an ADU specialist in your area.

Wrap up

The best way to know about ADU financing options is to work with an expert ADU professional.  They will help you choose the best path to finance your ADU.