Considerations For Home Renovation Funding
Are you or someone you know looking for money to update, repair, remodel or renovate? Home renovations can bring hefty bills and sometimes the mere thought of paying them makes homeowners wish for funding. First off, know that any home renovation loan options augment how much you need and what you’re willing to offer for collateral. This type of borrowing, just like credit cards, falls into two categories: secure and unsecure.
Secure home loans require either collateral or equity. The snapshot definition of equity is the accrued value of mortgage payments made against the principal minus the interest. Or sometimes it includes the equity per the terms of an interest-only mortgage. On the other end are unsecured loans, which allows homeowners to receive an equity free loan. They’re also sometimes referred to as personal loans. Qualify and you’re free to spend all or a portion of the loan renovating and the rest on other bills. No, it’s not “free” money, your lending institution approves an amount relative to your creditworthiness and other factors such as additional income, length of employment and the ratio of debt to monthly housing costs.
Funding Solutions in a Nutshell
The most practical solutions for remodeling and renovations are, home equity loans and short-term funding options, such as a loan from a private business owner or personal loans from family or friends, use savings account, get approved for an established line of credit, or use credit cards, the ones with the lowest interest rates, or refinance your home, by taking out a second mortgage. What worked for your best friend Hal and his wife, might not be the best funding source for you. Use the resources that you have to do research and learn about the solution that enables the fastest repayment with the simplest terms.
Profile the Renovations Budget
Before taking out a loan or line of credit, access the most pressing needs. Be sure to profile the renovations budget to include incidentals for possible delays and minor annoyances. We have seen it several times on Reality Shows dedicated to remodeling and renovations, unexpected financial burdens during remodeling. But what they don’t show you is how the homeowners obtained funding. Since most of us don’t have a fortune stashed away for home repairs or updates, become a practical budget planner. Profile the amount of funding that’s needed by calculating a written estimate of costs, even if you are doing a complete update to the property or cosmetic fixes or new addition.
Pre-Qualifications Is Another Option
Yet another option is to pre-qualify for a home improvement loan. Under this category, there are also government programs for those who qualify. These would include an FHA Title 1 or Title 2 Home Improvement Loans, and if you are looking to buy a property, rehab it and move in, you might also qualify for an FHA 203k loan. By pre-qualifying, we’re referring to the application approval process.