02/22/2022
So you're thinking about doing a renovation, but don't have the cash. Don't worry, there are various options to help finance home improvements and renovations!
Let's dive in a little deeper to the most common financing options:
✔️ 𝙲𝚊𝚜𝚑 𝙾𝚞𝚝 𝚁𝚎𝚏𝚒𝚗𝚊𝚗𝚌𝚎
This type of refinancing replaces your existing mortgage with a new home loan for more than your current loan amount — with the difference being the extra cash. Lenders will generally let you borrow enough to pay off your current mortgage and take out more cash, usually up to 80% of your home’s value. You must have equity built up in your house to use a cash-out refinance.
✔️ 𝙷𝚘𝚖𝚎 𝙴𝚚𝚞𝚒𝚝𝚢 𝙻𝚒𝚗𝚎 𝚘𝚏 𝙲𝚛𝚎𝚍𝚒𝚝
A HELOC is another way to borrow against the value of your home. With a HELOC, you receive a line of credit — usually up to 80% of your home’s value, minus the amount of your current loan amount.
✔️ 𝙷𝚘𝚖𝚎 𝙴𝚚𝚞𝚒𝚝𝚢 𝙻𝚘𝚊𝚗
With a home equity loan, instead of getting a line of credit that you can tap into as needed, you would receive a lump sum of money. A home equity loan could make sense if you don’t want to do a cash-out refinance because you have a low interest rate.
✔️ 𝙲𝚛𝚎𝚍𝚒𝚝 𝙲𝚊𝚛𝚍
Another option for smaller home improvement projects is to use a credit card. This may be a good idea if you can get a 0% introductory rate, and you plan on paying off the amount before the higher interest kicks in. Also, look for sign-up bonuses and cashback incentives
It is equally as important to know how much money you will need for the renovation. If you're hiring a contractor, get a bid for labor and materials, and add on 10% for surprises. If doing the work yourself, compile materials, quantities, costs, to get a total. Be sure to include permit fees, and equipment rental.
If you're considering a renovation, I can provide lender recommendations, as well as I contractors trust, to help make your dream home a reality! Message me today with any questions you may have.
