Four Financing Options For Home Renovation

So you have finally purchased that 19th century farm house that you have always pictured yourself living in the problem is how do you finance the restoration? It is easy to get mortgages for the value of the home even a little extra if you have a good credit rating but today a renovation can cost more than the original purchase price of the property.

The first option is to look at your available assets. You can get a home equity loan if there is any equity in your house. Utilize your credit cards for short-term remodeling or borrow money from family these concepts are only usable in a short-term remodeling once the remodelings finished you must be able to refinance your house and pay off the relatives, high-interest credit cards and also roll your home equity funding right into your home mortgage.

You might be able to get a “credit line.” A credit line is usually easy to get up to $30,000.00 without much effort and with a very little quantity of documents, these lines of credit are good for short-term remodeling that are under the $100,000.00 dollar mark. The interest rates tend to be on the high side however you can draw out the cash as you require it and only pay interest on the money that has actually been withdrawn and once again as soon as the restoration is completed you can refinance and pay off the line of credit and integrate all your loans in the mortgage.

Depending on the scope of your renovation you may be eligible for store loans and credit card offers. Many home stores now have their own credit cards they offer deal such as interest free credit for one year you may be able negotiate a longer term. The important thing here is to pay off the loan/credit card prior to the free period expiring otherwise the interest will revert back to the initial purchase. Some stores will also offer you a interest free construction loan for your project the terms of these construction loans vary from store to store read the fine print carefully like the credit card deals these usually have a time limit. Again one the renovation is completed you can refinance and pay off the loan avoiding high interest dept.

Construction loans are generally reserved for larger projects this kind of loan is a short term loan the money can be taken as needed and interest is paid on the money that has been taken out. Almost everyone now offers construction loans this completion has brought the costs of these loans down. The nice thing about construction loans is that you can withdraw the money as you need it once the renovation is done you can refinance and have one closing and one mortgage. One thing you should keep in mind when shopping for a construction loan is the fees and finance charges as always keep an eye on the fine print for hidden charges.


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