Spring and summer are great seasons to make additions to your home, but many people are concerned about how to finance these projects. Did you know it is easier than you think?
These are three popular avenues for homeowners to secure money for a home improvement or remodeling project:
- Home Equity Loan: Perhaps the easiest way to finance an addition, a home equity loan uses the equity you have accumulated in your home as collateral. Since it is a secured loan, rates are usually much lower than unsecured loans or credit cards.
- Home Equity Line of Credit: It is a revolving line of credit that, like a home equity loan, is secured by the equity the owner has built up. The rates and terms are dependent on credit history and the amount of equity in your home. It is convenient for smaller projects, but unlike the equity loan, you only pay back what you draw from the line.
- Construction Loan: If you are planning a major addition or remodel that will dramatically increase the value of your house, a short-term construction loan might be the best option. Lenders want detailed information on the construction plan with timelines and budgets because funds are drawn down as used. You will only pay interest on the loan during the buildout, but the loan is paid off with a new mortgage when the house is completed.
Contact us today so we can discuss the best option for you — whether it is one of these three options, or another, less popular, financing option such as a Title 1 loan, personal loan, or energy improvement mortgage. You may even find that a traditional cash out refinance delivers the best rate and terms for your project.
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