Common Cents Remodel - Secret solutions for financing your remodel

Current economic conditions are inspiring more people to remodel and repair their existing homes rather than buy new this is no secret. The real secret is in this turbulent time your credit standing will influence which financing route you take. That being said, before actually applying for a loan, talk to at least a couple different lenders (Wells Fargo) (Bank of America) about all your financing options. Keep in mind, the lender will tend to focus on the options they carry. This is why many people like to start with an established mortgage broker as they usually carry more types of loans. Besides helping you understand your options and the various trade-offs involved, the lender can pre-qualify you for one or more loans.

Here are Weaver's financing options you’ll want to consider:

Cold, Hard Cash.

As they say cash is king, paying with cash can be an attractive option if you’re planning a small-scale remodeling project. It’s commonly known that you won’t be charged interest or rack up debt like you would with other options. But you still want to think twice before tapping into your personal savings. After all, you’re using money that would normally be earning interest. The money could be used for other purposes such as college or that new man room you have always wanted. Plus, you can’t write off project expenses paid in cash. If you do go this route, continue to faithfully stash cash into your personal savings account to ensure you have a viable safety net to cover unexpected expenses.

Plastic

Credit card. Another option that’s best suited for smaller, less-costly projects. Swiping plastic subjects you to high interest rates and late fees if you default on payments — and there’s no tax deductions available. Common since says, the best strategy is to charge the remodel project to a card with a high credit limit and low interest rate.

Home Equity Line of Credit (HELOC)

In current economic times this puppy is hard to find. The HELOC is a form of revolving credit where your home becomes collateral. You pay interest only on what you use as you draw from this line of credit and the interest is tax-deductible. But because there’s a variable interest rate with this type of financing, payment rates fluctuate based on prime interest rates (and that makes it hard to budget on a monthly basis). With a HELOC, you’re approved for a specific amount of credit, a percentage of your home’s appraised value (often 75 to 80 percent, according to the NAHB (National Association of Home Builders). That amount is subtracted from the balance owed on the existing mortgage. Other factors affecting your credit limit include your income, debts, and your credit history. Learn more about this option here.

Home Equity Loan

Planning a one-time project? With a home equity loan, you get the entire loan up-front and gradually pay it off. Plus, you won’t have to worry about the interest rate wavering with this loan, because it’s fixed (making it easier to budget into your monthly finances!). Be sure to agree to terms you know you can afford.

Cash-out Refinance

You should know with a cash-out refinance, you replace your current mortgage with a larger one. Using the extra cash to pay for the project. Payments are spread out over time. Plus there’s often a lower interest rate than with home equity financing. When considering this option, pay attention to up-front costs: application, appraisals, and title insurance, as well as the number of years left on your current mortgage.

203 (k) Mortgage

If your older, fixer-upper home is seriously in need of rehabilitation and modernization, you’ll want to look into a 203 (k) mortgage. Why? You can refinance the existing mortgage and combine it with home improvement costs into a new mortgage, therefore avoiding high interest rates associated with interim financing. The loan is based on the home’s projected value after improvements are made. A 203 (k) mortgage is administered through the FHA (Federal Housing Administration). See other government backed programs Homestyle, 203 streamline, for possible remodel funding.

Secured/Unsecured Loans

One of the best options on the market when it comes to choose a loan for your man cave or luxury kitchen, you have two options as you can choose from a secured Loan or an unsecured Loan. Through a secured Loan the amount that you borrowed would be secured by the asset that would be owned clear and free by the borrower. The asset can also be sold and seized by the lender during the Loan process when the repayments are not done properly according to that agreed on the installment schedule. The proceeds that are availed from selling your property or asset would be taken to pay off the Loan amount.

However, in an unsecured Loan  (Landmark Funding) you should agree to the lender to repay the loan installments according to the set plan. In this type of loan, the only guarantee that the lender would have is the signature of the lender which also refers to as the signature for the Loan amount. the assets that are most commonly used in remodeling loans to secure their loan amount is actually the home itself and this promise or pledge to pay back the remodeling loan is often defined as mortgage. There are fundamentally three great reasons that would help you get a secured Loan which are to get a lower interest rate, to borrow more money and to reduce taxes. Check out the Same as Cash Option.

Personal Loan

This might be the hardest loan to qualify for in the current economic times, A personal loan isn’t tied to your home.it’s usually tied to collateral such as savings accounts, stocks, bonds, and more. With this option, you can borrow as much as $25,000. However, you’ll probably acquire a high interest rate (often higher than with other options). The interest isn’t tax-deductible. Shop around to find the lowest interest rate. This should be your last resource.

Key Tip: Take time to look at your personal finances, review short term / long term goals. You might consider talking to a Personal Financing Agency to ensure you’re on a safe financial path.

Now you know the secrets, there are several options for your remodel funding. So what are you waiting for, get your remodeling juices flowing and call your funding expert today!

Jim W.
(240) 315 5785