How to Finance an Accessory Dwelling Unit
Are you looking to finance an accessory dwelling unit (ADU) on your property but need help finding options? An ADU is a secondary housing unit attached to or located on the same property as a primary residence. These structures are becoming increasingly popular as homeowners seek to earn rental income or provide housing for family members.
Financing an accessory dwelling unit can seem overwhelming, but with HFS Financial, it can be quick and simple. Here are some ways to finance an accessory dwelling unit.
Using Cash to Fund an Accessory Dwelling Unit
If you have the money, paying for the ADU upfront with cash is the simplest option. This approach eliminates the need to pay interest on a loan and allows you to avoid the paperwork and approval process that comes with a loan. Saving up all this cash can take quite a while, though. So, unless you have years and years to wait, this may not be the best option for most people.
Using a Home Equity Loan or HELOC to Finance an Accessory Dwelling Unit
A home equity loan is a loan secured by the equity in your home. Equity is the difference between the value of your home and the amount you owe on your mortgage. With a home equity loan, you receive a lump sum and make monthly payments, typically from 10 to 30 years. A HELOC is similar to a credit card but works more like a credit card with a revolving line of credit.
To qualify for a home equity loan or HELOC, you must have a good credit score and a low debt-to-income ratio. You will also need a certain amount of equity in your home, typically at least 20%.
Using a Personal Loan to Finance an Accessory Dwelling Unit
Personal loans can be a good option if you don’t have equity in your home or don’t want to put your home on the line. Personal loans also typically have shorter repayment terms than home equity loans, with repayment periods ranging from one to twenty years.
HFS Financial can help you find the perfect personal loan for you, ensuring that no matter what happens, your home will never be at risk.
Using Credit Cards to Finance an Accessory Dwelling Unit
Using credit cards should always be a last resort. These typically have crazy-high interest rates associated with them, and unless you have amazing credit, you will likely need many cards to cover the costs associated with building and financing an accessory dwelling unit. Be sure you have a strategic plan in place if you choose to go this route.
Financing with HFS Financial Is Simple
Financing an accessory dwelling unit can be a complex process, but with the help of HFS Financial, it doesn’t have to be. Using our sixty-second rate checker, you will know if you are conditionally approved for a personal loan in just one minute. Our experts will then follow up with you to make sure you can finance the accessory dwelling unit of your dreams. Are you ready to get started? With HFS Financial, “You Dream It, We Finance It.”