Making improvements to your home is essential in order to keep your home maintained and updated, especially when necessary repairs are required. As home improvements are a way to add value to your home, they also require extra money in your budget. Here are two ways you can infuse your monthly budget with the extra cash to pay for home improvements you need and want:
Refinance Your Mortgage
Using your home's equity, or your home's value above what you owe on your home mortgage is a way to finance some home improvements your home may need. You will need to talk to your mortgage broker about refinancing your mortgage, which will essentially pay off your existing mortgage with a brand new one. And you can finance your entire home's value in the new mortgage, which can pay off your existing mortgage and give you extra cash for the home improvements you need. Be prepared to provide proof of employment and income and any other documentation your broker asks for.
Refinancing your mortgage is also a great way to take advantage of lower mortgage rates that may currently be available. When you originally financed your home mortgage, you may have been approved for an adjustable rate mortgage, or a mortgage based on the current lending rate at the time, which may be higher than what rate is available now. Historically, over the past several decades the interest rates for mortgages have been decreasing. Lowering your interest rate will allow you to finance more at a lower cost, or interest rate, which can save you money in the long run.
Take Out a HELOC
Another way to use your home's equity is to apply for a home equity line of credit or HELOC. A home equity line of credit allows you to finance a line of credit on your home's equity. Instead of refinancing the entire mortgage and paying closing costs for an entire mortgage refinance, you apply for and get approval for a line of credit, which can be used to pay for your home remodeling and repairs.
Because it is a revolving credit line, your home equity line of credit can be used, paid off, and be used again, if you wish, just as a credit card is. A home equity line of credit is similar to a credit card, but it is tied to your home's value. This helps you get a low-interest rate on the line of credit to save you money as you pay it back.
Keep in mind you will need to have an appraisal completed on your home for either of these loans for your mortgage broker to confirm the value your home has. Be sure to plan to pay for this expense during the approval process. Contact a company like Liberty Escrow Inc for more information and assistance.