Renovate Your Home by Refinancing
Would you like to make home improvements or update your home? Perhaps create additional living space for your growing or extended family?
Many individuals make the common mistake of paying for remodeling repairs with their personal credit cards. However, experts recommend refinancing your existing mortgage to take advantage of the equity you’ve built in your home. United Northern Mortgage Bankers, Limited. has refinance options that can give you extra funds to help renovate or repurpose your home to fit your need or style. Keep in mind that by refinancing your existing loan, the total finance charges may be higher over the life of the loan.
Refinancing to Renovate Solutions
A cash-out refinance taps into the equity you have in your home by refinancing your current mortgage and customizing a new home loan for more than is currently owed on your home. Unlike home equity loans (HELOC’s)and reverse mortgages, this program is not a second mortgage on your home. It is simply refinancing your current mortgage.
An FHA 203(k) loan, allows you to roll the cost of home improvement projects into a single monthly mortgage payment by refinancing your current mortgage. The amount you borrow is a combination of the price of the home and the estimated price of the repairs, including labor and materials.
203(k) loans are guaranteed by the Federal Housing Administration (FHA), which means lenders take less risk when offering this loan. As a result, it is easier to get approved (especially with a lower interest rate). This is a huge advantage over using a credit card or taking out a personal loan, both of which have higher intertest rates and shorter repayment terms. You should know that for every $1,000 in upgrades you finance, you’ll add about another $6 a month to your monthly house payment.
A Reverse Mortgage (solution for adults 62+) also known as a Home Equity Conversion Mortgage (HECM) allows you to convert the equity in your current home into usable dollars that you may draw upon. You may receive this money in a lump sum, in tenure payments or you may establish a Line of Credit (LOC) and access the monies as needed.