Residential Matters

Experienced Palos Heights Architect, JP Architect’s Ltd., Shares the Best Methods to Afford A Remodel, Renovation or Addition

Oak Lawn Addition Completed

So last month, we discussed the top 5 reasons why it is important to begin planning your addition or renovation during the winter. BUT… how are you supposed to afford such things? Good thing you asked because we have the answer. The options may actually surprise you and help you realize your dream home or project IS financially achievable.


So let’s split this into two categories: Current homeowners and those looking to buy their first home.


FIRST…How can a current homeowner afford a renovation or addition?


  1. SAVE, SAVE, SAVE – From a young age, most of us have been taught to save in case of emergencies. You can take that same approach with your home addition or remodel. Look, most homeowners know they will outgrow their first home, but that doesn’t mean you have to leave the neighborhood and house you know and love. You can have a plan in place, from the beginning, to put money aside, monthly or however often you deem acceptable, with the intent to use those funds on your home addition or remodel. Saving up over time makes the investment much less daunting when it comes time to actually begin your project. This method allows you to see your hard-earned $ and time spent saving come to fruition, while also paying nothing back for a loan or line of credit. In one word, it is the most SATISFYING approach you can employ to afford a home renovation or remodel.


  1. HOME EQUITY LINE OF CREDIT – A home equity line of credit is a great tool available to current homeowners to use for an addition or renovation project. It allows you to borrow against the available equity in your home, meaning that the amount you owe on your home is less than the value of your home. You can typically borrow up to 85% of the value of your home minus the amount you owe. Once the borrowing period ends, the repayment period (typically 10-20 years) begins.


*Information about the Home Equity Line of Credit is from Bank of America. Please talk to your lender (or we can point you in the direction of a lender) for more detailed information.


  1. CASH-OUT, REFINANCE – Refinancing is the process of obtaining a new mortgage in an effort to reduce monthly payments, lower your interest rates, take cash out of your home for large purchases, or change mortgage companies. Most people refinance when they have equity in their home, which again is the difference between the amount owed to the mortgage company and the value of the home. The benefits of a cash out / refinance is the fact it is one big loan – so instead of having two separate payments as you would with a home equity line of credit and mortgage, you would have one. In addition to having one payment, you would be able to cash out a portion of the new loan (up to 85% of your homes value minus the amount you owe) to appropriate toward your renovation or addition.


*Information about Cash-Out, Refinance is from NerdWallet &



  1. 203K or REHAB LOAN REFINANCE – Yes, you can refinance your current mortgage loan into a 203K or rehab loan. The only difference is — the “purchase price” will essentially be the cost to pay off your existing loan. Generally, the repair costs are added to the amount of the existing loan balance to determine the total new loan amount. However, the new loan amount can’t exceed 110% of the future appraised value. No cash may go to the borrower with a 203k or Rehab refinance. All funds must go to the contractor doing the work and the current lender to pay off the existing mortgage. For more specifics about whether this is a good option for you, talk with your bank or lender.


*Information about 203K and rehab loan refinance can be found on Mortgage Insider.


  1. FAMILY & FRIEND GIFT OR LOAN – Not all homeowners are fortunate enough to have a family member or friend they can ask for a loan or obtain a gift from. But if you do, this is an option worth exploring for your renovation or addition.





  1. 203K LOAN OR ANY OTHER AVAILABLE REHAB LOAN – There are many rehab loans available for first-time homeowners / buyers including the 203K. It is best to discuss specifics of each with your lender or bank, as they are most knowledgeable. However if you need someone to talk with, we can point you in the right direction through a referral to one of our trusted partners. BUT…Let me briefly explain the benefits of these loans to prospective first-time homeowners looking to renovate or add an addition to the home you’re buyiny. You can obtain a 203k or any other rehab loan for as little as 3.5-5% down on your first property. A rehab loan can cover the full extent of a new construction or provide you with the necessary funds for a kitchen and bathroom renovation. So, where do we come in? Well, in order to secure the necessary funds for the project you have in mind…you need to provide your bank or lender the architectural documents and designs so you can be approved for the desired amount.


*Information about Renovation / Rehab Loans can be found on Guaranteed Rate, Mortgage Insider & this blog. Please contact Dave Lugo, w/ any questions.


  1. FRIENDS OR FAMILY GIFTS OR LOAN – Once again, not all first-time homeowners / buyers are fortunate enough to have a family member or friend they can ask for a loan or obtain a gift from. But if you do, this is an option worth exploring for your home renovation or addition project.


Now, you’re probably asking yourself why an architecture firm like JP Architects, Ltd. is providing you loan information about how to afford your home renovation or addition. Well…it’s quite simple actually. First of all, hiring an architect should be your first step in the addition or renovation process so why not hear it from an experienced, trusted residential architect like JP Architects, Ltd. We also have provided many current homeowners and first-time buyers with architectural drawings and designs to show the bank or lender what it is they’re doing to the home. This is critical step in the process for the homeowner so bank or lender can approve the buyer for the loan they’re asking for.


Additionally, we have the network connections and knowledge to guide you through the ENTIRE process and give you your dream home.


Any questions? Please reach out to us at 708.907.3651. We’d be happy to talk with you about your potential renovation or addition. In the meantime, check out some of our completed designs by visiting our residential architecture page.



Until Next Time,


Jose R. Pareja, AIA



JP Architects, Ltd. is Chicago’s premier residential, commercial and capital improvement / educational architecture firm. Located at 7250 College Dr., Palos Heights, IL 60463, we serve all of Chicago and it’s north, west, east and south suburbs. We have completed 100’s of projects since our inception in late 2015. Our team can accommodate your needs and provide you with only the highest-quality experience. From additions and renovations to commercial architecture and capital improvement / educational projects, our expertise is unparalleled. Our goal is to not only provide exceptional designs; it is also to ensure satisfaction and stress-free experiences.

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