Around 13 million home renovation projects are started in a given year in the U.S., with amounts spent totalling over $350 billion. Just a few commonly renovated areas include the kitchen and bathroom, with many homeowners opting for features such as open floor plans, high ceilings, and the replacement of opaque walls with glass doors so as to immerse their home in natural light. If you are dreaming of making a change to a specific area or to the flooring or other general fixtures of your home and you are wondering how to fund your projects, the following tips may help.
Refinancing Your Home
Key 30-year mortgage rates have fallen once again, opening the window to refinancing plans – as found in recent research published by Bankrate. The average 15-year fixed mortgage rate fell to 2.38%, while the 30-year fixed-rate jumbo mortgage lowered to 3.24 percent. The 30-year fixed mortgage rate, meanwhile, saw a 0.33 discount on the week beginning 19th July, 2021 (compared to the previous week). So, if you thought it’s too late to refinance, the good news is, it’s not as statistics indicate that this may be a good time to remortgage one’s home. Two of the fastest ways to do so are via the SHA and USDA (as an appraisal isn’t required) but whichever means you choose, you should be quick to ensure that you receive current, favorable rates.
Taking Out a Home Equity Loan
If your mortgage is favorable and you prefer to keep it as it is, then a home equity loan may be of more interest. Under this arrangement, you obtain the tax benefits of a total refinance but you avoid closing costs and you get to pay back the amount over a fixed period (generally up to 30 years) at a fixed interest rate. The latter will most likely be higher than if you go for a remortgage but it’s a matter of crunching numbers and deciding which is most beneficial either in the short- or long-term (depending on your current priorities and needs).
Opting for a Home Remodelling Loan
Check out what different banks can offer you in terms of a home remodelling loan. The latter is a product catered to those who wish to take out an unsecured loan and is ideal for those who have just bought a home (because their home does not need to be used as collateral). Precisely because they do not require collateral, rates tend to be significantly higher than other means of finance. Therefore, they are ideal for smaller projects – such as a quick bathroom renovation.
Applying for Government Loans
If you qualify for a government loan, you could make big savings on interest. The Federal Housing Administration, for instance, facilitates loan approval by insuring loans made by private lenders to renovate properties meeting specific requirements. The maximum amount that can be borrowed is $25,000 for one property or $60,000 for multiple units. Requirements include having occupied the home for at least 90 days, having verifiable income or employment and a debt-to-income ratio of no more than 45%, and not being in default or any other federally guaranteed loan.
Renovations are common at a time in which cookie cutter home design no longer appeals. From bathrooms to kitchens to whole-house remodelling projects, there are a number of projects that appeal to many homeowners and long-term renters. You have a wide choice when it comes to financing your project – including refinancing, taking out a home equity loan, and choosing a home remodelling loan. You should also see what the FHA has to offer if you fit their requirements for dedicated loans.