The Rising Popularity of ADUs

Accessory Dwelling Units (ADUs) have become a transformative solution to the evolving housing landscape. These compact, secondary residences, also known as granny flats or in-law suites, offer some homeowners an innovative and practical way to maximize property use. Typically constructed in the backyard or attached to the main residence, ADUs provide added living space without compromising the existing structure.

ADUs address the growing needs for affordable housing, offering a practical option for multigenerational living or can be a useful source of rental income. Their flexibility in design and functionality allows for customization based on the homeowner's preferences and local zoning regulations. Many cities and municipalities have recognized the benefits of ADUs, relaxing regulations to encourage their construction.

Tips to Get Started

• Research local regulations: Before diving in, familiarize yourself with local zoning laws, building code and permit regulations.
• Design a functional space: Plan the layout to optimize space and functionality. Consider the unit’s purpose – whether it’s for family members, rental income or a home office – and tailor the design accordingly.
• Select a qualified contractor: Choose a licensed and experienced contractor with expertise in ADU construction. Verify their license, check references and review previous projects.
• Budget planning: Establish a realistic budget covering construction costs, permits and any unforeseen expenses. Obtaining multiple quotes from contractors can help control costs.

How to Pay for It

• Cash-out refinance: You can refinance your existing first mortgage to take cash out to pay for the ADU. Your existing mortgage balance will increase, but first mortgage loans typically offer lower rates than other types of loans.
• Construction loan: This type of loan typically has shorter terms and may require a different payment structure compared to traditional mortgages.
• Home equity loan or line of credit: Using the equity in your existing home is a popular choice for paying for an ADU project. This allows you to borrow against the value of your home and pay back the balance over time.

As the demand for affordable housing options continues to rise, ADUs are an innovative and practical solution for some homeowners. The real estate team at Pacific Service CU can help you understand your financing options. For more information, visit our website or call (888) 858-6878.