5 Best Ways of Refinancing Your Home Remodeling Project

Everybody dreams of a house – a place they can call home.

Everybody dreams of a house – a place they can call home. Yet, while a home is perfect in all aspects, with time, the perfection calls for some remodeling. If you have decided on a home remodel – you must have carried out thorough research and found a remodeling plan bespoke for your home’s needs. But here comes the tricky part; you might be short on ideas for financing your home remodeling. In all honesty, home remodeling is a daunting task. However, this does not mean that you cannot give your home a new look altogether. Here are five best ways you can finance your home remodeling project with ease.

1. Cash-Out Refinance

Cash-out refinance is a great medium of financing your home remodeling, especially if you have much equity in your home. You can get between 80-90% of your home value minus the amount you still owe in the mortgage, from banks in a loan. The terms may vary, however. The option of cash-out refinancing is available to people with credit scores of around 620 to 640 at the minimum. Although this choice is feasible as you get a lump sum and may lower the interest rate, there’s still a downside to it in the shape of closing costs that you might have to pay.

2. Home Equity Loan

A home equity loan is secured against your house and has a fixed-rate mostly. This method can get you a loan up to 85% of your homes’ market value, excluding your mortgage leftovers. You can keep your original mortgage, which is beneficial if the interest rate is low. A home equity loan is especially an excellent approach to finance your home remodeling as it has a faster approval rate than cash-out refinances.

3. Remodeling Construction Loan

Going for this option is most viable when you plan major renovations but don’t have much equity in your home to finance them. The lender will allow you a loan depending on the future value of the house after the remodeling is done. This refinancing method usually has a higher interest rate as well as closing costs on a slightly high side.

4. Home Equity Line of Credit

HELOC is a revolving credit that has flexible rates. The amount you owe monthly is dependent on the current rate and loan balance. HELOCs have two parts. The first part is draw period in which you make interest-only payments. This is followed by a repayment period after 10-15 years where you can no longer draw funds. It is pertinent to remember that once the repayment period starts, the monthly payments may sky-rocket, taking you by surprise.

5. Credit Cards

Credit cards may be a great way to finance your small scale refinancing projects such as bathroom vanity or installing a new closet system. New cards have introductory zero-percent APR for initial 12-18 months usually. You can use these to finance the home remodeling but be vigilant enough to repay the balance before interest rate jumps in.

 

Take Away

Remodeling a home is as demanding as it is exciting. Therefore, choosing the right way of refinancing is key to prevent future financial liability. Short on ideas for refinancing your home remodeling project? Leave everything to experts at Custom Financing Solutions. Displaying a cloud-based checkout system, CustomFin brings all financial plans on the web. No more fiddling with papers or forgetting that one important document. Guided by our 24/7 customer service, simply submit your financial documents from the comfort of your desktop or cellphone and pay what you can. At CustomFin, we make financing easier, and a home remodel project – a piece of cake. Together, let’s take save you from the financial burden of home remodeling and make it easier for you.

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