How does the saying go? It’s all about time and money?
Historically low rates combined with high home equity values provide an opportunity for homeowners to inexpensively borrow money for a remodel. This could improve your living situation and increase the value of your home even more!
Here are a few options to consider:
1. Refinance – Everyone knows that refinancing your home at a lower rate can lower your monthly mortgage payment. However, did you know if you add money on top of that refinance you could keep your monthly mortgage payment close to the same as it is now and get a large sum of money to improve your home? You can add the difference between the existing loan amount and the current value of your home to the refinance and then apply that money to fund that new kitchen or second story addition.
2. Line of Credit – But what if you already have a low interest rate because you bought at the right time a few years ago? Well, is there a chance your home value has increased over the years? With interest rates low again and a possible substantial difference between your existing loan amount and the current value of your home, this could provide an opportunity to take out an inexpensive line of credit to pay for improvements on your home too!
** Borrowing against the value of your home acts like a large sum of money which you can even put in a bank account and draw interest on, further reducing the cost of the loan. Apply that money to increasing the value of your home and you will also have a place that better suites your current and future lifestyle.
3. Construction Loan – There are also traditional construction loans, and low rates are making these much more appealing. These are another great option but typically have more stipulations on what you can use them to purchase, may require a pricing bid from a contractor to be approved, etc. However, they also provide more structure around spending so you don’t accidentally use the funds for something that will ultimately not add any long-term value to your life, like some skidoos or an exotic car.
In closing: Combine today’s historically low rates with your home equity to make where you live, where you LOVE to live.