Financing Your Renovations

Financing Your Renovations



Financing Your Renovations
If you have chosen to​ renovate your home then you know the price can easily exceed your predictions .​
Home renos tend to​ have what is​ known as​ scope creep .​
This is​ when the renovations start and as​ they progress new things or​ problems cause there to​ be more work than originally predicted .​
This can be difficult to​ deal with is​ funding is​ limited so its a​ good idea to​ build contingencies into your financing plans right at​ the start .​
That way when the surprises pop up, you will be ready for them .​
When thinking about renovation financing there are two likely candidates for you to​ consider .​
The home equity loan and the home owner's line of​ credit .​
The amount available for a​ home equity loan is​ based on the amount of​ equity that you have built up in​ your home .​
This loan is​ sometimes referred to​ as​ a​ second mortgage .​
It is​ calculated by taking the value of​ your home and subtracting the amount left outstanding on the original mortgage .​
If you own your home outright, then the amount would be the home's value .​
As an​ example, if​ you have a​ home that is​ worth $250,000 and you have already paid off $110,000 then your accumulated equity would be $140,000 .​
The value of​ the property is​ what guarantees the loan so the interest rate is​ low as​ well as​ they payments .​
It is​ also normal to​ be able to​ secure fixed interest rates for such loans .​
The other popular financing option is​ the home owner's line of​ credit .​
This loan does not have a​ finite amount save for the limit which is​ once again decided by your equity .​
This is​ a​ popular option as​ it​ allows for a​ lot of​ room when considering costs .​
The loan operates much like a​ credit card, with a​ variable interest rate .​
This is​ certainly the most flexible of​ the options and does not have a​ definite end date .​
The line of​ credit remains open for as​ long as​ you need it​ and do not close it​ out .​
The best way to​ discern which type of​ loan is​ proper for your needs is​ to​ confer with a​ financial expert or​ banker .​
Prioritize your needs and try to​ find a​ loan that is​ tailor made for you .​
Remember that your home is​ going to​ be on the line as​ collateral so be sure to​ plan your payment schedule carefully and within what you can afford to​ pay .​
Make sure that you research all your options here and find what work s for you and for your budget.




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