So, the pandemic has you looking to improve your home. How do you pay for it? – Oklahoman.com

The national median price of homes sold by Realtors spiked 12.9% from December 2019 to December 2020. Housing inventory fell to a record low, according to the National Association of Realtors.

Segal, for his part, loves the house he shares with his wife and their three daughters, but the quarters were getting cramped. He found a contractor to add a master bedroom and other living space to the house.

Paying for home improvements can pose a challenge, however. A home equity line of credit (HELOC) is one tried-and-true source of renovation funds. But HELOCs work only for homeowners with significant equity. If you owe $300,000 on your $400,000 property, a bank is unlikely to lend $100,000 through a HELOC. To keep your loan-to-equity level at 80%, or $320,000, youd be able to borrow just $20,000.

RenoFi offers a different approach: Homeowners can borrow up to 90% of their homes after-renovation value.

The company has partnered with credit unions throughout the country to offer the loans, says Justin Goldman, founder and chief executive of RenoFi. Goldman launched the company after experiencing firsthand the challenges of paying for renovations on an older home.

He created RenoFi to fill what he sees as a gap in the market. Goldman found most lenders didnt offer after-renovation loans, so he began persuading credit unions to add RenoFi home equity loans to their offerings.

How RenoFi loans work: RenoFi loans are second mortgages. In one example, Ardent Credit Union offers 20-year loans at a fixed rate of 4.25%, Goldman says. Thats higher than the rate on a primary mortgage, but it includes the flexibility of allowing homeowners to borrow against yet-to-be-created value.

Borrowers pay for an appraisal that establishes the homes value after renovation. The appraiser looks at the proposed construction plan and determines by how much the work will boost the propertys market value.

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So, the pandemic has you looking to improve your home. How do you pay for it? - Oklahoman.com