It's Always the Right Season to Consider a Home Renovation
Have you recently said to yourself, “I want to renovate my home, but I’m not sure how to pay for it”?
If you are considering doing any home renovations, the first hurdle may be figuring out how to pay for it. We are here with questions and answers to consider about the home renovation and financing process to help get you on the way from making your house into a home.
Question #1: How much will the renovations cost?
This is the first thing to consider. Do you need to replace your roof or build on an addition that may cost upwards of $10,000? If you’re planning for a major renovation, you may want to consider using a contractor, which will add to the cost as well. Determining the approximate cost of your project up front will help you decide if you may need to look into financing options.
Question #2: How much do you owe on your home?
Figuring out how much you still own on your home, in addition to the renovation costs, will set the stage for the next two questions.
Question #3: How much is your home currently worth?
This question will help you start weighing your loan options. You’ll need to determine whether you have enough equity in your house to help finance the renovations. If so, you may want to consider a renovation loan, home equity line of credit (HELOC), or cash-out refinance.
Question #4: How much would your home be worth post-renovations?
Renovation loan products generally take into consideration the value of the your home after renovations are completed. This is based on the current condition of your home, including what your contractor has provided as renovation costs. Other types of financing may not consider the post-renovation value, so this may give you an advantage if you don’t have much equity or if the post-renovation values greatly exceed the as-is value of your home.
Question #5: So, what’s the best option for you?
A renovation loan may be most helpful if your project cost is higher and you currently have less equity in your home. If you currently have greater equity in your home and/or your project costs are smaller, you may want to look into other financing options. Ask your local Prosperity Home Mortgage Renovation Specialist for more information.
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