How to Finance Your Renovations

By
Real Estate Agent with Keller Williams Realty 276530

If you have chosen to renovate your home then you know the price can easily exceed your predictions. Home renos tend to have what is known as "scope creep." This is when the renovations start and as they progress new things or problems cause there to be more work than originally predicted. This can be difficult to deal with is funding is limited so its a good idea to build contingencies into your financing plans right at the start. That way when the surprises pop up, you will be ready for them.

When thinking about renovation financing there are two likely candidates for you to consider. The home equity loan and the home owner's line of credit. The amount available for a home equity loan is based on the amount of equity that you have built up in your home. This loan is sometimes referred to as a second mortgage. It is calculated by taking the value of your home and subtracting the amount left outstanding on the original mortgage. If you own your home outright, then the amount would be the home's value. As an example, if you have a home that is worth $250,000 and you have already paid off $110,000 then your accumulated equity would be $140,000. The value of the property is what guarantees the loan so the interest rate is low as well as they payments. It is also normal to be able to secure fixed interest rates for such loans.

The other popular financing option is the home owner's line of credit. This loan does not have a finite amount save for the limit which is once again decided by your equity. This is a popular option as it allows for a lot of room when considering costs. The loan operates much like a credit card, with a variable interest rate. This is certainly the most flexible of the options and does not have a definite end date. The line of credit remains open for as long as you need it and do not close it out.

The best way to discern which type of loan is proper for your needs is to confer with a financial expert or banker. Prioritize your needs and try to find a loan that is tailor made for you. Remember that your home is going to be on the line as collateral so be sure to plan your payment schedule carefully and within what you can afford to pay. Make sure that you research all your options here and find what work s for you and for your budget.

Posted by

Stephanie Baubie
Realtor/Broker
NC License #: 276530
Keller Williams Realty North
3150 N. Elm Street, Suite 101
Greensboro, NC 27408
336-420-3894
stephaniebaubie@kw.com
stephaniebaubie.yourkwagent.com

 

 

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Home Improvement
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financing renovations
renovate your home
put money into your home
guilford county homes
guilford county north carolina real estate

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Ambassador
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Stephanie, what a great first post!  Welcome to ActiveRain - we'll have you addicted in no time!

Feb 18, 2016 11:50 AM #3
Rainmaker
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LuxurySoCalRealty Compass San Diego
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Hi Stephanie thanks for sharing re: finance for renovations welcome to Active Rain.

Feb 18, 2016 12:40 PM #4
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Sharon Kowitz
CRS-SRES-ABR-GRI-E-Pro-CREN Fonville Morisey Cary, NC - Cary, NC
Cary, NC Relocation Specialist ~ Buying or Selling

Welcome to Active Rain and Congratulations on your first blog post! This is great information and I look forward to reading more from you!

Feb 18, 2016 12:57 PM #5
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Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Calabasas CA

Stephanie,

welcome to our blogging community! I hope, being here will be beneficial for your business:) 

Feb 18, 2016 04:06 PM #6
Rainer
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Chrissi Chapman Topoleski
Coldwell Banker Residential Brokerage - Leesburg, VA
HOME~There is no place like it!

"Scope creep" is a great way to describe it! I know of someonewho renovated an older home, and everything they did uncovered other, huge problems with the house. Luckily, they had enough equity to finance it and have no plans to move.

Feb 18, 2016 08:03 PM #7
Rainmaker
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Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty - Kalispell, MT
The House Kat

Welcome to ActiveRain! Loans are certainly an option for making upgrades. Thanks for sharing.

Feb 18, 2016 08:25 PM #8
Rainmaker
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Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Good morning, Stephanie Baubie I love your first post.... great explanation of the two most popular methods of financing a home project.... and "scope creep" is a new one to me....I'll remember that term!!

Feb 18, 2016 08:38 PM #9
Rainmaker
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Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

and welcome to ActiveRain....it's a great place to learn, share, market and network....and I hope you enjoy all of it as much as I have..

Feb 18, 2016 08:39 PM #10
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Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
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Welcome to Active Rain!  As REALTORS® who have been here for more than 9 years, it's well worth it!

 

Feb 18, 2016 09:08 PM #11
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Sybil Campbell
Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia - Williamsburg, VA
REALTOR® ABR, SFR, SRES Williamsburg, Virginia

Hi Stephanie Baubie, Thanks for a great first blog post and good luck with your business.

 

Feb 19, 2016 12:24 AM #12
Rainmaker
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Sybil Campbell
Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia - Williamsburg, VA
REALTOR® ABR, SFR, SRES Williamsburg, Virginia

By the way, welcome to Active Rain and here are a few points to add to your total.

Feb 19, 2016 12:24 AM #13
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Mery Fernandez Empire Network Realty Luxury Brokerage
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Hi Stephanie! Welcome to the world of Activerain, may your blogging  create a whole new chapter in your Real Estate Career.

Feb 19, 2016 02:19 AM #15
Rainer
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Margaret Kapranos
Century 21 Real Estate Alliance - San Francisco, CA
San Francisco Bay Area REALTOR. 415-608-5070

Great content.  You sound like there's a contractor or banker lurking around somewhere in the background!  Best of luck utilizing ActiveRain.  From this post, you are sure to become a successful publisher.  

And of course, if you are ever in my neck of the woods, do a shout out!

Feb 19, 2016 07:03 AM #16
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Robert May
Robert W May - Lethbridge Real Estate - Lethbridge, AB
Real estate consulting

Welcome to Activerain and congratulations on your first blog post here.  There is tons of great info to read and a community full of interesting and helpful people.  Feel free to come stop by my blog and leave a comment or say hello.

Feb 19, 2016 12:02 PM #17
Rainmaker
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Joan Dickie
Keller Williams Premier Realty - La Crosse, WI
Keller Williams Premier Realty

Welcome to Active Rain and congratulations on your first blog here.  If this is an example of your writing, I'm looking forward to reading more!

Feb 21, 2016 02:17 AM #18
Rainmaker
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Letitia Stevenson
BHHS Fox & Roach | www.DelawareValleyRE.com - Greenville, DE
Listing Agent DE/PA/MD, Digital Marketer & Coach

Hi Stephanie, Thanks for sharing and welcome to the Rain! ActiveRain is a great place to share your knowledge, expertise and thoughts, as well as network and learn so much from the vast pool of talent already onboard. I look forward to reading your upcoming posts. If you would like to connect with me on ActiveRain, please subscribe to my blog! Welcome Aboard and Much Success! 

Feb 21, 2016 03:21 PM #19
Rainmaker
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Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Stephanie,
Great topic!  Welcome to the world of Active Rain blogging.  It is an extremely valuable platform to connect with other agents and potential clients.  I recommend you check out the "Resources" section and click on "Getting Started".

Feb 21, 2016 11:45 PM #20
Rainmaker
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Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Stephanie, great post for those homeowners wishing to upgrade/update their home versus moving!    Lots of valueable information!   Welcome to ActiveRain!  

Feb 22, 2016 01:35 AM #21
Rainmaker
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Robert May
Robert W May - Lethbridge Real Estate - Lethbridge, AB
Real estate consulting

Keep on adding more blog posts and article and you will soon find that it will attract readers, generate phone calls, and make money.  It is a slow and gradual process but works like magic.

Feb 22, 2016 02:59 AM #22
Ambassador
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Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams Fox Cities - Stevens Point, WI
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Good advice Stephanie!

Welcome to Active Rain, looking forward to reading many more of your posts, let me know if there is anything that I can do to help as you get started here.
Bob

Feb 23, 2016 03:25 PM #23
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