GRAND RAPIDS, Mich. (WOTV) — 2015 is projected to be a big year for the housing and home improvement market. Many contractors are booking up now, which is why it’s a great idea to get your financing in order so you can move ahead with your projects.
Where to Start
Step 1: Research your project
The more you know about what your specific home improvement project entails, the more you can evaluate appropriate products and proposed services. This tip holds true for something as “simple” as interior painting and re-carpeting all the way to planning an extensive remodel or expansion to your home.
Step 2: Estimate the total cost of your home improvement project
Estimating the cost of your project is critical in determining the required size of your home improvement loan and which financing option will work best. Make sure to get estimates from several contractors to ensure you are getting a reasonable price. Make an allowance of about 10 percent in determining your ideal loan amount, as unexpected costs may arise during the renovation.
Step 3: Meet with your lender and discuss the best option to finance your home improvement project.
There are a number of ways to finance your home improvement project and it’s in your best interest to discuss honestly with your lender what the best avenue is for you.
- A Mortgage, used as a cash-out refinance, can provide you with the needed money to renovate, remodel, and more, while keeping you in a low interest, one monthly payment option.
- A Home Equity Loan or a Home Equity Line of Credit (HELOC) can also provide you with the needed money. Both equity options are loans secured by a second mortgage, allowing you, the home owner, to borrow against the equity in your home. A Home Equity Loan is a closed end loan meaning you receive a lump sum at loan closing with fixed monthly payments and repayment terms. A Home Equity Line of Credit is an open-end loan meaning you have access to the available maximum loan balance throughout the length of the loan and you can use the money as needed.