Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Explain term Renovation and Refinancing with example?
Expert Solution

Step 1
A renovation loan is a type of loan that includes the amount of mortgage as well as the amount of renovation of the property.
Example
A person wants to buys land of $100,000 and to make a building on that land the person requires $20,000. Now, if the person takes a renovation loan than the loan amount should cover both the expenses and it should be $120,000 ($100,000 + $20,000).
Thus, the renovation loan is the loan that covers the mortgage value as well as renovation expenses.
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