Are you planning on updating your house? A home improvement project can be expensive, but you don’t necessarily need to pay for the entire cost upfront. There are several loan options that can make it easier for you to get your home improvement project started right now. What are your options?
A Personal Loan
One of the most common options people use to finance a home improvement project is a personal loan. This could be a great option for you if you don’t want to use your home as collateral or if you don’t have enough equity in your home to use one of the other options available. The downside of this option is that you might have to pay a higher interest rate because a personal loan is not necessarily collateralized.
A Cash-Out Refinance
Another popular option is a cash-out refinance. In this option, you will refinance your mortgage, replacing your current loan with a new loan. Then, you will withdraw some of the equity in your home. You will increase the balance you have to pay back, but you will have a lump sum of cash you can use to cover the cost of your home improvement project. If interest rates have gone down since you took out your first mortgage, you might be able to keep your monthly payment the same. If you can’t get a lower interest rate, you might extend the length of the mortgage to prevent your monthly payment from going up.
A Home Equity Line Of Credit
Finally, you should also consider a home equity line of credit. As long as you have enough equity in your home, you can withdraw some of the equity and use it to finance the home improvement project. Essentially, it is a second mortgage, but it has a lower interest rate than a personal loan because you use your home as collateral.
Get Ready For Your Home Improvement Project
You need to think carefully about every financing option available to you. They each have their benefits and drawbacks, and you should get your finances in order before you decide to apply for a loan. Consider reaching out to a professional who can help you.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.