With so many options available to you, there's never been a better time to obtain a loan to remodel your home. Ideally, you should know the amount of money you want to borrow before you apply for a loan. It's also a good idea to understand your credit rating so you know how much bargaining power you have with lenders.
Three Options for Home Remodeling Financing
Some people just pull out their credit card to pay for refinancing. However, you may not have enough available credit or don't wish to tie it up with such a large purchase.
These options typically make more sense:
- Home equity line of credit: The amount you can receive with this loan depends on the equity you have built up in your home. It works like a revolving credit card. You can also write yourself a check from your available credit, and you only pay interest on the amount borrowed.
- Home equity loan: This is a lump sum loan tied to the value of the equity in your home. You receive the entire sum at once and repay it over the next 15 to 30 years. Although interest rates tend to be higher than conventional mortgages, you don't have to pay closing costs.
- FHA 203(k) mortgage: Backed by the Federal Housing Administration, this loan allows you to refinance your existing mortgage. You can also combine the costs of your remodeling project with your refinanced mortgage. This increases the value of your home along with how much you can borrow.
Midland Mortgage is here to help you understand your financing options. Please contact us at 1-800-854-9484 to request a consultation.