You Have Options with Orion

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Our brokers are often asked, “What are the best mortgage options for remodeling a home?”

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Orion is not only known for our technology. If your client is looking for home renovation financing or mortgage options for home improvements, there are several solutions to consider. The most common ways to fund major home remodeling projects include:

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• Paying cash
• Home Equity Line of Credit (HELOC)
• Fixed Rate Second Trust Deed
• Cash Out Refinance
• Renovation Loan
• Reverse Mortgage for eligible homeowners

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To help your client choose the right home improvement loan, here are the basic guidelines for each financing option.

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Paying Cash for a Remodel

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Depending on the scope of the project, your client may have enough savings to pay cash for their renovation. The primary advantage is avoiding interest costs and monthly payments. However, remodeling projects often exceed initial budgets. It is important to advise your client to plan for cost overruns. Some homeowners pair cash savings with a small HELOC to ensure liquidity during construction. Even if you do not originate the loan, you are building long term client trust and future business opportunities.

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Home Equity Line of Credit (HELOC)

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A HELOC for home improvements works similarly to a credit card. The borrower is approved for a maximum credit limit and can draw funds as needed, making payments based on the outstanding balance.

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Advantages:

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• Flexible access to funds
• Payments based only on amount used
• Ideal for projects completed in phases

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Disadvantages:

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• Variable interest rates
• Minimum payments are often interest only
• Borrowers may carry a large balance longer than expected

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Fixed Rate Second Trust Deed

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A fixed rate second mortgage operates like a traditional mortgage but is recorded in second position. Because of this, the interest rate is typically higher than a primary mortgage.

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Advantages:

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• Fixed monthly payment
• Predictable budgeting
• Allows borrower to keep an existing low first mortgage rate

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Disadvantages:

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• Higher interest rate than primary loans
• Many lenders limit combined loan to value to 80 percent

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Cash Out Refinance

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A cash out refinance for remodeling allows your client to refinance their existing mortgage and increase the loan amount to access equity for home improvements.

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Advantages:

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• 30 year fixed rate option
• Lower monthly payment due to longer amortization
• Fixed interest rate for the life of the loan

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Disadvantages:

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• Borrower pays interest on funds before they are used
• Current mortgage rate may increase
• Higher closing costs compared to rate and term refinance

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Renovation Loan

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A renovation mortgage loan combines a traditional fixed rate mortgage with renovation financing. It can be used for purchasing a fixer upper or refinancing an existing home for major upgrades. Excess renovation funds are placed in an escrow account and disbursed as work is completed and verified.

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Advantages:

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• Competitive fixed rate
• 30 year mortgage after completion
• Ideal for major structural renovations

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Disadvantages:

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• Longer and more detailed approval process
• Contractor draw schedule requirements
• Funds released based on completion milestones

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Piggyback Strategy

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Some homeowners combine a traditional 30 year fixed mortgage with a HELOC. This “piggyback” approach allows them to maximize primary loan funds while retaining access to flexible equity financing.

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Reverse Mortgage for Home Improvements

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If your client qualifies for a reverse mortgage, it may be used for home improvements provided there is sufficient equity. This can be a viable option for eligible homeowners seeking to renovate without increasing monthly obligations.

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Helping Your Clients Choose the Right Remodel Loan

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Every homeowner’s situation is different. The best mortgage option for remodeling depends on equity position, existing mortgage rate, project scope, and long term financial goals.

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Orion brokers are well versed in HELOCs, second mortgages, cash out refinance options, renovation loans, and reverse mortgages. With the right guidance, your clients can confidently select the home renovation financing solution that fits their needs.

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At Orion, you truly have options.

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