Are you looking for a cost-effective solution to fund a home renovation project? If so, you will want to consider obtaining a renovation loan by refinancing your mortgage. There are several benefits to doing so, one of them being attaining more favorable interest rates than other loan options. Many homeowners have made use of renovation loans to fund home improvements they would not otherwise have been able to afford.
Chances are, you have considered refinancing your mortgage. This is when your new lender pays off the amount you owe to your previous lender and you get a new mortgage and repayment terms, usually with more favorable interest rates. However, did you know that refinancing can be done in conjunction with a renovation loan? As a way of obtaining funds for home improvements, renovation loans offer a lower interest rate than other types of loans and credit cards. On top of that, repayments are packaged into your new mortgage payments, which means that you do not incur an additional, separate loan.
Homeowners who have built up equity in their properties, be it through market growth or prior renovations, are eligible to apply for a cash-out refinance. This allows you to take out a loan of a larger amount than your original mortgage and receive the difference as cash. This amount can then be used for home improvements, serving as a renovation loan. Although the loan amount will vary by lender, most lenders offer refinancing mortgages up to 80% of your property’s value. However, as the value of your mortgage will be higher, this means higher monthly repayment terms that can span up to 30 years, depending on your individual circumstances.
While there are certain considerations to be accounted for before taking out a renovation loan, the appeal lies in its low interest rates and opportunity cost. Grasping a time-sensitive opportunity to renovate your home can raise its value considerably. In addition, if you are facing a problem with your HVAC system, for instance, a home improvement project can help to lower energy bills, saving more in the long run. The cash advance and lower interest rates of renovation loans make it a lucrative option for some homeowners who are looking to finance a renovation. It can also be an alternative to moving house.
Stockton Mortgage is a full-service, independent mortgage bank headquartered in Kentucky and licensed in 11 states as an approved Ginnie Mae issuer. With a strong team of professional underwriters who has access to a Borrower Intelligence System, all our loans are 100% funded and closed in-house. When you engage our services, you can expect efficiency and excellent customer service every step of the way from application through closing.