Ways to Finance Your Home Remodel
Sometimes, remodeling is a necessary home improvement, and not just for decor purposes; perhaps you have a disabled family member moving in with you or a baby on the way. The problem is, being in these circumstances doesn’t mean you have the money in the bank to cover the project.
In an ideal world, we could all self-fund a remodeling project, but for those who can’t, there are plenty of options available, so don’t let this stop you.
Mortgage Refinance
Remortgaging is the perfect choice for those who’ve financed their homes within the last few years at a higher interest rate than what’s now available. Mortgage rates change all the time, so if you can get lower monthly payments while also improving your home, then why not do it?
Home Equity Loan
The equity in your home is the amount you physically own and how much it’s increased in value over the course of your ownership. With this finance option, you are releasing that money from your bank or credit union, back into your account, which is perfect for those who already have low mortgage rates.
The repayments for a home equity loan become a second mortgage – a term you have most likely heard.
Home Equity Line of Credit (HELOC)
Home equity lines of credit (HELOC) are a revolving source of potential funds, much like a credit card that you use as you see fit with a variable interest rate (Investopedia). They typically come with a spending period of 10 years and are followed by a repayment phase of around 20 years.
Cash-out Refinance
This option can have lower interest rates than a second mortgage, like a home equity loan. Cash-out refinancing is, again, related to your equity, but rather than paying two different mortgage payments, you take out a greater loan that covers both. Your new mortgage will combine the loan amount with the remaining sum from your original mortgage.
For example, if your house is worth $400,000 and you have $50,000 in equity, you could take $20,000 for your home improvement project and have a new combined loan totaling at $370,000. So, $350,000 would be carried over from your first mortgage and $20,000 from your new loan.
Home Improvement Loan
If you’ve newly purchased a house that requires lots of work, an equity loan won’t be an option for you, yet. However, there are other loans available to you through a bank or lender.
We recommend looking into Title 1 loans as a starting place.
Contractor Financing Options
Many contractors will have their own financing options, so this could be something else to consider.
At WORKS By JD, we provide financing options through GreenSky. There are some fantastic deals on offer including no added interest if your bill is paid in full within 12 months!
Credit cards
As long as you know you can cover the monthly payments, credit cards are an easy way to buy the smaller pieces you need to decorate your new space.
We understand that selecting which finance plan is best for you and your family can be overwhelming. So, if you’d prefer to speak to someone in person, contact WORKS By JD’s Mortgage Loan Originator, David Snover.