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Home Improvements Turn Average Homes into Dreams Come True
If you're thinking about taking out a home improvement loan, there are several options to consider. First and foremost, your mortgage consultant needs to know why you want a home improvement loan. Here are some factors to take into consideration.
? How long have you been in the home?
? Will the improvements increase the property value?
? Are you making improvements to increase energy efficiency?
? Will improvements be made in one fell swoop, or in stages?
? What is the current outstanding balance on your mortgage?
? What is the appraised value of the home?
? How much will the improvements cost?
? What improvements will be tax deductible?
? Do you have other revolving debt that you would like to pay off at the same time?
? Are you making improvements because you plan to sell the property?
The New Tract Home Blues
Buyers of newly-built homes are often tapped out after making the initial down payment and closing costs, including upgrades to amenities and the inevitable need for new furniture. Shortly thereafter, they realize they'd like to make additional improvements to really have the home of their dreams.
If you're planning on putting down roots (pardon the pun), landscaping may be in order. The developer may have been kind enough to make the front yard a perky green, but if the back yard is a disturbing brown color sparse with weeds, you may be entertaining the vision of a pool or deck.
Look into the option of a Home Improvement Loan with a fixed interest rate as a 2nd Trust Deed. This type of loan does not require you to have equity built up in the existing mortgage. The maximum loan amount could go as high as 125% of the current appraised value of the home, and you can make the improvements yourself or go the extra mile and hire a contractor if the job requires architectural design, permits and inspections.
The Major Overhaul
If you have built up equity in your home and are geared up for some major renovation, the Home Equity Line of Credit (HELOC) is probably your best bet. This adjustable loan allows you to use your equity as a line of credit, so if you have improvements that are phased in over time you can simply write a check when you need to pay a bill.
It's like a having a credit card with a much lower financing rate. In fact, the HELOC can be used for any reason at all - even paying off that credit card debt. In most cases, this action turns that revolving debt payment into a tax deductible payment with a lower interest rate. The HELOC is generally a 2nd Trust Deed, unless it is used to pay off and replace the 1st Trust Deed.
A construction loan is an alternative to the HELOC for borrowers who don't want to use or don't have equity, and this type of financing can be used for construction on an existing dwelling. The lender will ask a lot more questions about what the borrower wants to do with the money, and the home owner will need architectural designs, permits and a licensed general contractor on board.
Construction loans are short-term loans that usually require interest-only payments until completion of construction, but the balance is due when construction is done. Most often, that is managed up front by setting up construction-to-perm financing. In this scenario, the loan is automatically rolled over into permanent financing at a fixed rate when construction is complete, and a rate-lock agreement can be purchased to carry the borrower through that period of construction.
Another option - depending on the value of your home and local loan amount limitations - is the FHA 203(k) Program. This financing is designed for the purchase or refinance and rehabilitation of properties that meet FHA guidelines. This is worth looking into if you need to bring a property up to compliance standards, finance eligible energy efficient improvements, or turn a single-family owner occupied dwelling into a duplex to accommodate Mom or Dad!
Just a Facelift, Please!
If you want to sell your home and you simply want to improve the curb appeal, it makes sense to go with a HELOC. Make sure you are aware of the current market value of homes in your area to make sure you're not going over the limit on the fair market value of your home. You'll want to get a return on your investment!
If you've had your home on the market too long and have not been able to sell, you might want to make some changes to give it a fresh new look and bring back the passion you once had for your home. Your mortgage consultant will help you weigh out your options for financing based on your outstanding mortgage balance, income and credit score.
Regardless of your reason for home improvement, make sure you share your goals with your mortgage consultant. He or she can walk you through the various loan options and confer with your tax advisor to make sure you're getting the best deal possible.
Mical Johnson is affiliated with Rock Financial, Inc., a Licensed Correspondent Mortgage Lender, Florida Department of Finance. For free consultation and more information about mortgage loan programs, visit Mr. Johnson website at http://www.TampaMortgageGuy.com
MORE RESOURCES updated Tue. August / 11 / 2020
How to get a low-cost mortgage refinance Bankrate.com
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Smart Money Podcast: Lower Mortgage Rates, and Moving During a Pandemic StarNewsOnline.com
What Is A No-Closing-Cost Mortgage? Bankrate.com
Bots Help Meet Mortgage Demand Credit Union Times
Don't make these mortgage refinancing mistakes | Business | swoknews.com The Lawton Constitution
How Does Mortgage Repossession Work? The Motley Fool
Mortgage industry faces 'tsunami' of refinancing deals Phoenix Business Journal
How to save through refinancing KTAR.com
Just Approved: Run, don't walk to refinance Beaumont Enterprise
Compare mortgage, refinance, insurance, CD rates Bankrate.com
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How to get a jumbo mortgage when lenders are scarce Bankrate.com
How to get the best mortgage refinance rates Fox Business
How to refinance your mortgage Fox Business
Money Roundup: South Florida GDP plunge worse than national average; Local billionaires made billions in first months of pandemic and more - South Florida - South Florida Business Journal
Money Roundup: South Florida GDP plunge worse than national average; Local billionaires made billions in first months of pandemic and more - South Florida South Florida Business Journal
Should a homeowner in their 70s with an underwater mortgage let the property go into foreclosure? - Washington Post
Should a homeowner in their 70s with an underwater mortgage let the property go into foreclosure? Washington Post
Is now the best time to refinance your mortgage? Fox Business
10 things to know before refinancing your mortgage Fox Business
Sell Rocket Companies: It Is REKT Seeking Alpha
'The Market is On Fire': Coronavirus Heats Up Real Estate Market Alongside Record-Low Mortgage Rates - Spectrum News 1
'The Market is On Fire': Coronavirus Heats Up Real Estate Market Alongside Record-Low Mortgage Rates Spectrum News 1
Refinancing boom hits Central Coast Pacific Coast Business Times
When should you refinance your mortgage? Fox Business
Mortgage refinance applications spike 79% as homeowners rush to take advantage of lower rates - CNBC
Washington Post: Reverse Mortgage a Possible Option for 'Underwater' Homeowner - Reverse Mortgage Daily
Washington Post: Reverse Mortgage a Possible Option for 'Underwater' Homeowner Reverse Mortgage Daily
Is Now the Right Time to Purchase a Home? The Motley Fool
With Mortgage Rates So Low, Getting a Floating Rate Mortgage Might Seem Crazy. Here's Why I Did It Anyway - MONEY
With Mortgage Rates So Low, Getting a Floating Rate Mortgage Might Seem Crazy. Here's Why I Did It Anyway MONEY
Record number of borrowers can now save on a mortgage refinance as rates drop from coronavirus fears - CNBC
Record number of borrowers can now save on a mortgage refinance as rates drop from coronavirus fears CNBC
How does mortgage refinancing work? Bankrate.com
Should I refinance my house? Mortgage rates drop to 50-year low as coronavirus spreads across the U.S. — and the world - MarketWatch
Should I refinance my house? Mortgage rates drop to 50-year low as coronavirus spreads across the U.S. — and the world MarketWatch
I refinanced my mortgage during COVID-19, and thanks to low interest rates I'll save about $50000 - Business Insider
I refinanced my mortgage during COVID-19, and thanks to low interest rates I'll save about $50000 Business Insider