Financing Your Home Improvement
For home improvement, remodeling, or repair projects that need financing, a home equity loan can be an excellent building resource because of the low rates, flexible terms, and tax deductible interest.
If a large amount amount of money is needed for home improvement, a home equity loan can provide a good option, because larger amounts are easier to pay off over a longer term of fixed installment payments. For many people, the monthly payment is a primary factor in the decision of how much to borrow and the extent of the remodeling or home improvement project.
If you intend borrow relatively small amounts and pay back the principal quickly, a line of credit can cost less than a home equity loan. A line of credit also provides the flexibility and convenience of being able to access money in variable amounts as you need it for home improvement.
Before deciding on a final loan amount, complete a cost breakdown that itemizes the estimated cost of your home improvement. Include items needed such as: lumber, concrete, plumbing, flooring, cabinets, paint, insulation, tile, fixtures, appliances, tools, safety equipment, labor, building plans, permits, clean-up, and a contingency amount for possible unplanned expenses.
Some home equity lenders offer loans up to 100% of value, and second mortgages up to 125%. A home equity loan or second mortgage provides a one-time distribution of funds with long term fixed rate payments, while another option is a home equity line of credit, which offers a credit account where you withdraw the money, and use it again as you pay it off. |
