Judith Sutton ABR CRS IDS PMN ASP IAHSP SRES GREEN
Judy@JudithSutton.com 908 803-0472
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FINANCIAL OPTIONS FOR YOUR NEXT HOME REMODELING PROJECT
Invited Guest Contributor P Babcock
The Pandemic has been a boom for the remodeling industry, fueled by a variety of lifestyle and job changes. Read below to see just what these financing options might be for you:
SAVING AND PAYING CASH
While if you can, saving and paying cash is your most ideal way of payment. But paying cash isn't an option for many. If you are not a natural saver or have college debt on top of rising apartment rent costs, this may be very difficult. So, what other methods are available?
HOME EQUITY LINE OF CREDIT
A HELOC isn't a loan but a variable rate, revolving line of credit usually up to 80% of your home value minus the amount you owe on your mortgage. This allows you to borrow against the equity in your home. HELOC's come with a draw period and repayment period. If you have a line of credit and don't need to spend all of it you won't have an additional debt to pay related interest on as you would with a conventional loan.
HOME EQUITY LOAN
This type of loan provides a lump sum for improvements. This also is based on the equity in your home. You pay it off with fixed payments and a fixed interest rate.
PERSONAL OR CONVENTIONAL LOANS
Here, you don't have to put your home up as collateral. Interest rates are typically higher, and there's a shorter timeframe to repay the money usually 5-7 years. You may get a low-interest rate but can not deduct interest paid for home improvements, as you can with a HELOC or home equity loan.
CREDIT CARD
Some cards provide cashback rewards for every dollar you spend but you will want to pay off your balance as soon as possible because credit cards have a much higher interest rate than other financings.
CASH-OUT REFINANCE
A mortgage refi could lower your rate and monthly payment and free up cash for renovations. Cashed-out finance cancels out your current mortgage with a larger one, which includes your current balance, the equity you are taking out, and the closing costs you want to include. Here, you can deduct the interest you pay on the new mortgage if you use the funds to make certain improvements.
There are other government-backed loans, as well, and speaking to your financial advisor or your favorite bank would be most helpful, especially if you wish to keep your money in investment accounts.
If you have any particular questions or need to be referred to a professional, call me. I can assist.
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