RenoFi Prefab and Modular Home Construction Loan Review

RenoFi is a lending/borrowing platform that allows individuals to access several types of uniquely structured home equity loans. RenoFi’s platform allows potential borrowers to connect with banks and credit unions via RenoFi’s home equity loans, RenoFi’s home equity lines of credit, and soon, RenoFi’s cash-out refinancing. Borrowers are able to connect with lenders throughout all U.S. states, except Texas, to access home equity financing based on the after repair value (ARV) of their home renovation project. This makes RenoFi well suited for individuals who are looking to renovate their home, or in the case of the prefab and modular home industry, build an ADU. It is worth noting that RenoFi loans are structured as second mortgages. While this will not affect your primary mortgage, it does require your lender to take a lien against your home. This allows RenoFi and their partners to offer high lending amounts with lower interest rates and fees.

When comparing RenoFi’s lending products to standard home equity loans, home equity lines of credit, cash-out refinancing options, and construction loans, there are a few key differences. First, while most home equity lending products are based on the current value of your home or your current equity in your home, RenoFi’s products are based on the ARV of their property. This allows borrowers to access funding amounts of up to 90% of the ARV of their home. Second, RenoFi loans do not require inspections or draw schedules like most construction loans or some home equity loans. 

When applying for financing with one of RenoFi’s lending partners, all borrowers and projects must undergo a period of due diligence. Each one of RenoFi’s partners may have different limits and regulations based on the particular bank and state regulations. However, standard components of RenoFi’s due diligence checklist are:

• An appraisal of your home and project ordered by your lender

• Financial information including a credit check - most of RenoFi’s partners typically require a credit score of at least 660

• Construction documents including contractor information, detailed cost estimates, a contract, and renovation or ADU drawings

Once an application is submitted, financing approval can often be granted in under 30 days, though due to current COVID-19 related delays, most projects are taking up to 6 weeks to receive approval. Once approved, funds are made available up front to the borrower who is then responsible for paying the general contractor. While rates are set by the specific lender, RenoFi’s home equity loan is based on a fixed rate with different partners offering 10, 15, and 20 year terms. On the other hand, RenoFi’s Home Equity Line of Credit is based on a variable rate with a 10-year interest only period, followed by a 20-year amortization period.

Lender	RenoFi
Website	https://www.renofi.com/
Lending Area	All U.S. States except Texas
Maximum Loan Size	Typically up to $500,000 with loan amounts up to 125% of the current home value or 90% of the after repair value (ARV)
Term	Depends on the lender and the lending product - Home Equity Loans with terms up to 20 years & Home Equity lines of Credit and Cash-out Refi with terms up to 30 years
Offer Land Financing?	No