Thinking of Making Home Improvements? Refinancing May Be the Answer!
The kitchen that looks like it came straight out of a 1960s magazine; The front porch that is slowly pulling away from the house; the garage door that closes – 50% of the time. As a homeowner you know that as the years go by you will need to make changes and improvements to your home to keep up its value and its function. Often, some of these improvements can be costly – the average kitchen remodel nowadays costs over $15,000! However, the smart homeowner knows that by investing in these improvements now they are not only raising the value of their home should they decide to resell, but they are also adding value to their satisfaction of living in the house.
Refinancing has become a popular way to fund home improvements over the years by paying off your current mortgage and taking out a new mortgage, often at a lower interest rate, while taking some of the equity you have built up in the home and using it for repairs and improvements. Many people find that they can get a double benefit from this: they not only get the improvements they so desperately want in their home, but they can usually also get a significant reduction in the interest rate they are paying on their mortgage. In fact, for some homeowners, they find that they can pay back the costs of the improvements they make through the interest rate reduction alone!
Some people are naturally nervous at taking away money from their equity they have built up in their home.
They may wonder if refinancing is something that they should even be considering at all. Refinancing is common practice in the mortgage industry, and in fact most homeowners will go through at least one refinance in their lifetime. From a financial perspective, it just makes sense! Your biggest asset in your life is no doubt your house – and that means one of your biggest sources of available cash in through your house.
If you are planning a major home improvement you may find that you can significantly raise the value of your home by refinancing now to pay for those improvements. For example, say you decide to redo your kitchen and build a back deck and patio onto your house. You refinance your mortgage and use $30,000 from the refinance to fund the improvements. After you are finished, your $100,000 house is now worth over $150,000 in value because of your improvements. You spent $30,000 of your equity to get a house now worth $150,000 that you only paid $100,000 for! Talk about a smart financial move!
If you have questions about how refinancing works, talk to your mortgage lender. He or she can tell you about all the options available to you. Also, go online and look around at other mortgage lenders. You’ll find the marketplace is competitive which means that consumers win in the end. You can often come out far ahead by putting two mortgage lenders head-to-head to compete for your business and save even more!
So get ready to tear out that outdated kitchen, update those bathrooms and add the library you always wanted to your house. A home refinance loan could very well be the answer to getting the remodel of your dreams!