Options for Improvement with Refinancing

If you own a home and would like to improve the way it looks, you can take the asset you have and make it greater by remodeling and making improvements that will increase your investment by increasing the value of your property.

To do this, you need an understanding of the basics of home improvement financing like qualifying for a loan, points and interest rats, mortgage lenders, contractors, as well as the options you have when it comes to financing home improvements. The process is much like that of financing the purchase of a home.

To qualify for a loan you should talk to lenders about your options. You might think about starting with a mortgage broker because he or she will have the most loan options available. This person is there to help you understand the choices available to you and what trade-off are involved. He or she can also pre-qualify you for one or more loans. Points and interest rates are a part of most loans. Points are a fee attached to the loan and are a percentage of the loan amount - one point equals one percent. Points cover the set-up expenses of the loan. The interest rate is an additional rate that you pay on the amount loaned and are set according to the type of loan you qualify for and the current real estate market conditions.

A mortgage lender is the source where your loan originates from and can be a bank, specialized lender or insurance company. Mortgage lenders are likely to have a wide selection of loans available for you to choose from. A specialized lender usually specializes in one or two types of loans and will usually offer competitive rates. Options from all of the above lenders can include variable versus fixed interest rate loans or secured versus unsecured loans Contractor home financing is also an option. In this case, the contractor hired to do the work on your home will use an established relationship with a mortgage lender to speed up the processing of your loan. 

Other specific financing options for home improvement are savings - using saved money to renovate or improve a home; credit cards that offer cash advance checks, often associated with a no hassle approach; cash-out refinancing, a financing tool that works if you have equity in your home and can borrow against it; home equity line of credit, most popular way to finance a home improvement and is tax deductible; home equity loan, similar to home equity line of credit and value added loans, new and popular type of loan that basically applies when improvements will make a substantial impact on the increased value of your home. 

ABOUT THE AUTHOR:  

Richard sells real estate in the San Gabriel Valley which is about 12 miles South of Los Angeles.  For more information, visit his website at http://www.westsangabrielvalleyrealestate.com