Can You Refinance Your Home To Fund Your Remodeling Project?Share
When you outgrow your home, you might want to add an addition to it. Putting an addition on a home is one type of remodeling project you can do at home, but you can also renovate the existing space you already have. In either case, you'll need cash to pay for the project. Many people turn to refinances for this purpose. Can you refinance your home to fund your project? Here are some factors that affect your ability to refinance your home to pay for your home improvements.
Your equity affects your abilityrefinan
Your home's equity is the top factor that affects your ability to get cash through refinancing. So you must know two key details: your home's value and your loan balance. The difference is equity. Lenders will not let you borrow 100 percent of your home's value. Therefore, the decision depends on how much equity you have. If you have a lot of equity and don't want to borrow all of it, you'll likely be able to refinance. However, you might not get approved for the loan if you need to use all your equity for the improvements.
The lender's view of your home value after the improvements
However, some lenders consider the home's value after the improvements. Thus, they base the equity you have on the final value of the home after the renovations. If this is the case, you'll have a better chance of having enough equity in your house to fund the project. When calculating your equity, you can ask a lender if they use your home's value before or after the improvements.
Your credit and financial situation
As with all loans, your credit and finances also affect the lender's decision to refinance your loan. You must meet the lender's criteria for approval. Lenders use credit score criteria when evaluating loan applications. They also use other financial criteria, including a person's debt-to-income ratio.
Consider interest rates
Finally, ask about the interest rates. Is refinancing worth it? Can you save money, or will you pay a lot more? The interest rates affect the amount of money you'll repay to the lender, so this is a vital factor.
Talk to a lender that offers refinances
Are you interested in learning more about refinancing your home to pay for your home renovations? Contact a lender that offers refinancing loans to find out more information about the process and requirements.