Hello World! Welcome Friends! If you’ve been itching to make home improvements and renovations but have been scratching your head about how you can afford those changes, well, there are a few options available to homeowners that you may haven’t thought about.
It doesn’t matter whether you’re looking to add a room or office to your house, build a family space, or remodel the kitchen doesn’t matter. But, unfortunately, securing financing to pay for the renovations can be challenging.
You can go to a traditional lender like a bank and ask for a loan, look into a home equity loan or home equity line of credit, refinance your mortgage, or take out a reverse mortgage.
Home Equity Loans and Home Equity Line Of Credit
Home Equity Loans: A home equity loan (HEL) allows you to borrow against the home’s equity. A home equity loan differs from a cash-out loan because a HEL doesn’t pay off the existing mortgage. Instead, it merely covers the amount of equity in your home.
Home Equity Line Of Credit: A home equity line of credit (HELOC) is another excellent opportunity to finance your home renovations. With a HELOC, you borrow against your equity up to pre-approved amounts. Think of it like a credit card on your house.
If borrowing on your equity and adding more debt to your home is out of the question, consider refinancing your mortgage with a cash-out loan or reverse mortgage.
Home Repair Loans
If you need to make your house renovations really fast and are looking for a quick cash loan, emergency home repair loans are your perfect solution. Personal loans for home repair allow borrowers to get up to $35,000 instant financing within 1 – 2 business days. You apply 100% online which takes just a few minutes and lets you get fast approval with no hard credit check.
Have bad credit? Home repair personal loans provide access to emergency cash regardless of your credit score. The requirements are simple and consist of proof of income and address basically.
Interest rates will suit any budget especially if you shop around and find a lender offering loans at 4.99% APR (for borrowers with good credit).
Repayment doesn’t make any hardships either. You can choose a suitable schedule and terms. Typically, home repair loans are paid off within a few years in equal monthly installments.
So, if you want to make your dwelling look better and more comfortable, take advantage of online personal loans for bad credit and use the funds for your dream come true.
Refinancing Your Home Loan For Renovations
Refinancing a VA loan, you may want to speak to your lender, but it may be a good idea to utilize a tool like a VA refinance calculator first to get an idea of how much your mortgage may increase or decrease over time.
With a VA loan, there are a lot of stipulations, so after you utilize the tool to determine if refinancing is a good option for you, you’re better equipped to discuss options with your lender.
With a refinance, you can opt to cash out, which is a low-cost way to afford home improvements, lower your mortgage payments, add more value to your property, and perhaps qualify for numerous tax breaks and incentives.
In order to refinance, you’ll need to go through a variety of steps to qualify.
Credit Score
As with any financial package, qualifying for a loan requires a minimum credit score.
To refinance, you’ll want to be at least in the 620 range or higher, and your exact credit score will be dependent on factors such as your loan type, the type of home (or the number of units) you’re taking the new loan out, and how much cash you’re trying to take from your equity.
Equity Requirements
In order to be able to refinance and take a cash-out loan, you will need your home to accrue some equity first.
To determine your equity, take the amount of your current debt on the home–in other words, the loan balance and subtract that from the appraised property value.
The remaining amount is the equity you’ve accrued in the home, which you can take as a loan.
There are some exceptions to the amount you can take on your loan. For example, FHA loans can’t be initiated until there is at least 15% equity in the home. Still meanwhile, VA loans allow for 100% refinancing options for you as a homeowner and are unique in the industry.
Debt-to-Income Ratio
Just as with your original loan, your debt-to-income ratio is a primary factor in your eligibility.
The DTI, or debt-to-income, is calculated by combining all current recurring debts and dividing them by your gross monthly income. The number remaining is the ratio lenders look at to determine the borrower’s viability, and typically, lenders are looking for a DTI of 50% or lower.
There are alternatives to refinancing your home, such as a reverse mortgage.
Reverse Mortgages
Perhaps you’ve seen countless TV ads that discuss getting a reverse mortgage and are unsure what that means or what a reverse mortgage is.
A reverse mortgage is a financial agreement where the homeowner agrees to relinquish their equity in the home to receive regular monthly payments, and it is a common practice to supplement retirement income.
You may consider a reverse mortgage that allows you to supplement your income, pay off substantial bills and debts like medical bills, or simply pay off your mortgage altogether in exchange for the equity you’ve accrued in the home.
A reverse mortgage can be a way to refinance your renovations or to help cover other expenses.
Click the links below for any posts you have missed:
Genius Tips to Transform a Home into a Multi-Functional Living Space
Outdoor Kitchens: 6 Must-Have Items for Your Backyard Grill
The Ultimate Guide for Buying Your First Home
Need Shipping Services? Here Are Some Useful Tips
What to Consider When Thinking of Moving Abroad
6 Pieces of Useful Equipment Every Cool Kitchen Needs
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Toodles,
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