If you still telling your spouse that shag carpet is still cool because you don't know how to finance your home improvement project-I can help!
You can finance your project in three ways:
Home-equity loans (Fixed Rate Lines) are installment loans, like regular mortgages and auto loans. You're given a certain amount of money, which you typically receive all at once and pay back according to a set schedule, over time. Home-equity loans are typically used for larger projects and are preferred for their fixed rate option.
Home-equity lines of credit, by contrast, work more like credit cards. You're given a credit limit that you can borrow against, and paying down your debt frees up more credit that you can potentially spend. Home-equity lines of credit have variable interest rates that are typically tied to the prime rate (a variable rate). Home-equity loans are preferred for smaller projects because you can pay the draw of money off when desired.
Cash-out refinancing, is when you replace your existing mortgage with a larger one and use the extra cash to pay for improvements and repairs. This could be a good choice if:
- Interest rates have dropped since you got your current mortgage.
- You'll be in the home long enough to recoup your refinancing costs.
- Your project adds lasting value to your home.
If you are still unsure of what the best option is for you, please don't hesitate to call!
I look forward to hearing from you,
Spencer Brown
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