Home renovations can be an expensive undertaking. Some homeowners are fortunate enough to have the savings they need to renovate their houses from top to bottom, without needing to even think about borrowing. However, if you are like most people considering making major home improvements, finances are a big hurdle. Here are some poignant facts and factors all homeowners should look at prior to refinancing for the purposes of .
Refinancing, Renovations, and Real Estate Law
Any decision that a homeowner makes concerning loans, mortgages, and refinancing has to be heavily considered in advance. Just as you probably shopped carefully for that first mortgage to ensure you got a good rate, refinancing can take some finagling. Speak to a real estate attorney about how refinancing to be able to afford your home renovations will impact you and your property. Taking out a second mortgage may lead to deed restriction, so you want to be extremely careful about borrowing money to make home improvements.
How Much Will You Ultimately Pay to Renovate Your Home?
Traditionally, people refinance their mortgages in order to do a couple of things. First, anyone who purchased their home while they had credit or finance issues might have only gotten approved at a higher than normal interest rate. Many people refinance their homes for the specific purpose of driving their mortgage payments down. Then, some people refinance their houses in order to help their kids pay for college. Ultimately, if you are going to refinance your home in order to access extra cash, you have to have equity in your home. How much you pay to renovate your home all depends on the equity that has built up in it, along with the interest rate that is applicable.
Both Refinancing and Renovations Can Take Time
There are some home lenders and refinance companies that promise that the application process is very fast, but this is an area where you want to take your time. Remember, renovations are going to take a good amount of time anyways. So, don’t rush and instead talk to different refinance companies. Compare their terms, analyze their interest rates, and only make a decision when you are ready. Use this same process when speaking to different home improvement contractors, and only sign a contract to have your home renovated once you feel completely comfortable with the process. When you have the time available, write down a game plan and timeline for having your home improvements completed. This way, you won’t feel the urge to rush into any situations in order to see your project completed.
Refinancing your house so that it can be renovated can be a very shrewd decision regarding your personal finances. Often, refinancing can be a cheaper option than paying for improvements with a credit card. If it takes everything that you have in your savings account to renovate your home, refinancing may also be a much more attractive long-term solution. Renovations will take time to complete, but homeowners then have the benefit of a house that is worth more – inside and out.