An accessory dwelling unit is an incredibly valuable build that can be placed on a property, helping increase property value and helping people in many different ways. Regardless of if you’re getting a remote working environment or preparing a small home addition for a family member, the biggest part of building an ADU is cost. Thankfully there are ways to tackle ADU financing, minimizing the stress of preparing for the build.
Getting a Loan
Getting a loan is going to depend on a lot of personal factors. These factors will include your personal credit score, your lending history, and the bank you decide to go through. In order to get the money to build an ADU, you’re going to need good credit and several instances where you have been able to pay back larger sums of money quickly. Without these two different things, it’ll be difficult for you to secure a loan of the amount that you’ll need to get your ADU built.
Borrowing from Family and Friends
If you’re unable to get a loan for your ADU or cannot get a large enough loan for your ADU, another way to get the funds to build your ADU would be to borrow it from family and friends. Family and friends know you on a more personal level allowing you to pull together the funds that are necessary to get started on the build. Borrowing from friends and family doesn't mean you should have no written contract; you should always put borrowing, regardless of who, into writing so everyone is aware of the terms. Family and friends are people you don’t want to aggravate, so make sure you’re fully capable of meeting the terms of the loan if you decide to take one from family friends.
Refinancing Your Mortgage
If you have a mortgage, one of the potential options is to refinance your mortgage for more than you owe, allowing you to use the additional money to finance your ADU. This is one of the easiest ways to finance your ADU build; if you’ve got a mortgage, this path is going to be the path of least resistance for you. Refinancing your mortgage should be done with your lender, and once you have finished refinancing, you can start looking at planning and prepping your site for your ADU build.
ADUs are already popular in the California area and are becoming more and more popular as each ADU is built. Though they can be slightly expensive, any one of these individual paths to financing an ADU is a great option to get a second home or an office environment set up. If you’ve secured the funding to build your ADU and want to get started, feel free to reach out to us at Acton ADU today! We’re ready to help you get the exact kind of ADU that you want and need, and with years of experience, we’re confident we can make an ADU build as smooth as possible for you.
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