3 Ways Finance Your Home Improvements
by Guest Post on Aug 11, 2016
Home improvements can cost anywhere from a few thousand dollars to tens of thousands of dollars. For that reason, you will most likely need to finance your home improvements. There are three ways that you can do that.
Cash-Out Refinance of Your First Mortgage
You can borrow up to 80% of the value of your home in a cash-out refinance for a conventional first mortgage on your primary residence. If your current mortgage is less than 80% of the value of your home, you can borrow 80% on a new first mortgage, pay off the existing mortgage, and have the remaining cash available to pay for your home improvements. For example, let's say that your home is worth $200,000, and your current mortgage is 130,000. You can borrow up to $160,000 ($200,000 X 80%), pay off the current mortgage of $130,000, and you'll have $30,000 for the improvements on your home.
Home Equity Line of Credit (HELOC)
HELOCs have certain advantages over cash-out refinances. The process is typically quicker and easier than what it is for a straight-up refinance, and they usually don't require a large amount of closing costs. Unlike first mortgages, HELOCs are not completely standardized. Terms will be determined by each of the many banks that grant these loans. But generally speaking, there will be a low introductory rate, which is comparable to the rates on first mortgages. The introductory rate might last for the first five years of the loan, and is often interest-only. That will also serve to keep the monthly payment at the lowest level possible. After the introductory term, the interest rate will adjust – often based on Prime Rate or some other standard index – and principal payments will also be required until the loan is paid off. You may be able to borrow as much as 90% of the value of your home, less the amount of the existing first mortgage. For example, if your house is worth $200,000, and you currently owe $150,000 on the first mortgage, the bank will lend you $30,000 on a HELOC ($200,000 X 90% = $180,000 - $150,000). The $30,000 could be used to complete the improvements on your home.
Just for Seniors - A Reverse Mortgage
A reverse mortgage is a home loan type that is available only for people aged 62 and over. As the name implies, they work in reverse fashion to a traditional mortgage. Instead of making payments to the lender, the lender makes monthly payments to you. But that's not all. You can also take the loan proceeds in a lump sum, which is very similar to a cash out refinance. In addition, you can set up the loan as a home equity line, so that you can access the money when needed. Either option can make it a good way to finance your home improvements. Depending upon your age, you can borrow as much as 80% of the value of your property, up to a maximum loan amount of $625,500. Understand however that since you're not making payments on the loan, interest accumulates on the borrowed funds and will be added to the loan balance. This means that the loan amount will increase for as long as you own the home. You must own occupy the property as a primary residence, and the lower the current mortgage balance is the higher the reverse mortgage amount can be. And though you don't need to qualify for the loan based on your income and credit, you must show that you have the financial resources that you can cover other expenses associated with the home, including property taxes and insurance. While this is an option if you are a senior citizen, you can always go the more traditional route by using either new cash-out refinance or a home equity line of credit. There are some cases where it's a good idea for a senior to take a reverse mortgage, and others where it is not. The point is, you do have options to finance your home improvements.
Popular Articles
Three Places to Spend Money on the Exterior of Your Home
When you have the exterior of your home remodeled, you are investing, time, energy and convenience into the project and you want to make sure that...
88482 Views
When to Use a Brush, Roller or Sponge Brush
Brushes are a good choice for painting trim and woodwork. They are also useful for cutting in the edges around the top and bottom edges and corners...
69972 Views
Homemade Headboards-Make an Upholstered or Wooden Headboard
Homemade headboards can add a lot of personality to any bedroom. They can be coordinated with existing furniture and room decor or they can be the...
69684 Views
Creating a Cottage Kitchen with Bead Board
Kitchen decor can range from modern and bold to elegant and elaborate by using strategic kitchen pieces. One of the most popular decorating trends...
48366 Views
Gas Fireplace Diagnostics and Troubleshooting
Follow these steps for diagnosing and troubleshooting Gas Fireplaces repairs. For the average DIYer, this may seem intimidating, depending on the...
29057 Views
Latest Articles
Understanding Indonesia’s Real Estate Investment Laws for Foreigners
Indonesia, with its stunning landscapes, deep-rooted cultural heritage, and renowned hospitality, has emerged as a top destination for foreigners...
on Jan 25, 2024
Real Estate Development in Asian Cities
In many Asian cities, the rapid pace of urban development has led to the decline of historic districts, areas once teeming with cultural richness...
on Jan 25, 2024
Shower Envy: Elevating Your Bathroom with a Stunning Walk-In Shower
Are you tired of the same old routine in your bathroom? It might be time to consider a change, and one way to elevate your bathroom to a new level...
on Jan 22, 2024
Exploring Crowdfunding as an Innovative Approach to Real Estate Investment
The landscape of property selling has been transformed significantly due to the advent of property crowdfunding. This innovative approach,...
on Jan 10, 2024
The Rise of Co-Living Spaces in Asian Cities
Asia, home to 21 of the worlds 30 largest cities, is a significant player in the global economy, contributing 38% of the goods and services of the...
on Jan 5, 2024
Featured Articles
What Type of Licensed Contractor Should You Hire?
on Feb 28, 2017
Hire Contractors / Estimates
Looking for a specialty project? There are many types of contractors available for your home improvement needs. Finding the right type of...
Actions
Top Categories
- Garden / Landscaping / Patio — 263
- Kitchen / Bathrooms — 240
- Real Estate / Finance — 200
- Appliance / Repair — 186
- Interior Design / Decor — 184
- HVAC / Air Conditioning — 147
- Cleaning / Maintenance — 144
- Improvements / Remodeling — 131
- Plumbing / Basements — 118
- Floors / Tile / Hardwood — 115
- Doors / Garages — 113
- Safety / Security — 112
Articles Archive
More DIY Articles
Paint Finish Formulations for Subtle Wall Effects
Painting walls is the easiest way to change the look and feel of a room. Sometimes, though, flat paint is too bland for the look of the room, but...
Renovating or Repairing Your Home? Let Self Storage Take the Strain and Stress Away
When it comes to a large scale renovation of your property, or maybe an urgent repair caused by a flood or small fire incident, the strain and...
The Advantages of Artificial Grass
There are a large number of benefits to installing artificial grass of which the reasons for installing are varied. Obviously, you don't need to...
Metallic Finishes and Accents
It can sometimes be hard to achieve a fresh and stylish décor in your home that oozes elegance and sophistication but stays far away from clinical...
How to Select the Right Mop to Suit Your Requirement
Mops might not be glamorous, but we'd be stuck without them, so it's time to show some respect to this hard-working household tool that is so often...