home lender Paso Robles

‘How to finance a backyard auxiliary dwelling unit,’ tips from the Paso Robles home lender

-Changes to California local and state laws have opened the door for homeowners to build auxiliary dwelling units (ADU) in their backyards. Commonly called a “mother-in-law” unit, the ADU is becoming a highly popular way to provide affordable homes for family members and Marc Coons, Paso Robles home lender, has some tips to help with financing.

Even though cities and counties have relaxed zoning laws to allow ADUs, they haven’t necessarily relaxed all of the building codes. In fact, the emergence of ADUs has most often resulted in an entirely new set of building codes and permitting processes. Depending on the town or county, some of the restrictions might include:

  • Limits on the square footage for an ADU.
  • Restrictions on renting to non-family.
  • Restrictions on using the ADU as a vacation rental.
  • Parking space requirements.
  • Fire and emergency access.

The first tip to adding an ADU to the property is to check local building regulations to make sure the building regulations are followed. The Paso Robles home lender says that there are few things as frustrating as being partway through construction when a code enforcer shows up, red tags the building and stops the work.

The options for adding an ADU to a residential property include:

  • Building an addition to the house or garage.
  • Buying and installing a pre-fabricated ADU.
  • Building a custom ADU.

Once any initial reviews and inspections are finished and permits are issued, the building can start. Some of the most common ways to finance an ADU include any form of financing that would apply to a remodel or new construction:

  • Refinancing the home.
  • An equity line of credit.
  • A construction loan.

Even when the choice is to purchase a pre-fabricated ADU, construction is still required for necessities such as a foundation, plumbing and electrical wiring.

Refinancing the home or taking an equity line of credit might be better choices than a construction loan for an ADU. This isn’t to say one can get a construction loan for an ADU, but it might not be the best option depending on the homeowner’s circumstances. A visit with the Paso Robles home lender can help make the best decision for the best financing.

  • A construction loan is separate from the current mortgage on the property and means incurring additional debt.
  • Refinancing means adding the cost of the ADU to a new mortgage and an increase in payments.
  • Using an equity line of credit is financing the ADU with the equity value of the property.

Every situation is unique and the best financing solution for one homeowner might not be the best solution for the neighbor down the street. Marc Coons, backed by CrossCountry Mortgage and serving the Central Coast since 2004, specializes in creating a smooth route to home loans of all kinds. With access to hundreds of lenders, Coons can help get the best financing for home loans, construction loans, or building an ADU.

Marc Coons
806 9th St. Suite 2A
Paso Robles, CA 93446
(805) 712-8040