Your home is your castle. You deserve to enjoy it. Remodeling is one of the biggest perks of owning your home and can be one of the best ways to raise its value. While you should always make improvements that will make your life better, it’s always good to consider ones that will raise the value of your home. When it comes to home improvements, knowing what you want is the easy part. The tougher question is figuring out how much you can afford.
Setting a budget is probably the last thing you think about when you’re dreaming up ideas to remodel your home but it is important to live within your means and to not dive in to a project that could potentially become a financial burden without a decent return. If you can’t afford to outright fund your remodel without assistance, you might consider getting a loan. Below are some of the loans I can assist you with, we have many options here at Stanford Mortgage.
FHA 203K Loan
Whether you’re buying a home in dire need of complete renovation or just want to modernize the kitchen or flooring of a property before you move in, an FHA 203k loan insured by the Federal Housing Administration could be the solution to your financing issues.
In general, an FHA 203k loan allows you to wrap your renovation costs into your mortgage with one loan and one closing. The amount you borrow is a combination of the price of the home and the estimated price of the repairs, including labor and materials.
As with any FHA loan, you’ll be required to provide complete documentation of your income and assets and your credit profile; but you’ll also need a detailed proposal for your home, including a cost estimate. An appraiser will estimate the value of the home in its current state and estimate the home’s future value based on the cost of the renovation.
Cash-out mortgage refinancing allows you to turn the equity you’ve built up in your home — the difference between your mortgage balance and the home’s market value — into cash. This is a different process from traditional refinancing, in which you replace your existing mortgage with a new one that has the same balance.
You can use the money from a cash-out refinance in a variety of ways, including funding an addition to your home. You might even be able to get a lower interest rate if you originally bought your home when mortgage rates were much higher.
Second Lien Loan
A second mortgage or junior-lien is a loan you take out using your house as collateral while you still have another loan secured by your house. Home equity loans and home equity lines of credit (HELOCs) are common examples of second mortgages. The term “second” means that if you can no longer pay your mortgages and your home is sold to pay off the debts, this loan is paid off second. If there is not enough equity to pay off both loans completely, your second mortgage loan lender may not get the full amount it is owed. As a result, second mortgage loans often carry higher interest rates than first mortgage loans.
For more information about these loan programs or to find the route that is best for you, call, text or email me today and I’ll get right back to you.