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Refinancing Options for That Home Renovation

Posted by Tim Shepard - Broker on Tuesday, May 30th, 2017 at 10:33am.

Make Your Home Renovation Dreams Come True

Refinancing options for renovations

There's nothing like a renovation to make your home feel new again. Small jobs like painting, adding new trim, or flooring, are usually pretty manageable, but bigger jobs like a new roof, dream kitchenswimming pool or other large scale projects, might require a bit of creative financing.

When researching current options for financing a home improvements in the Destin area, we went straight to the expert and spoke to Jason Hebert, Vice President Mortgage Loan Originator at Trustmark National Bank, Destin FL. He outlined the following two solutions as the most common choices for refinancing a home renovation. 

Cash out refinance1. "Cash-Out" Refinance

A "cash-out" refinance enables a borrower to take out the equity, up to 80% of the value of one's home, and obtain a new fixed rate loan. Generally, the benefits of this option is that it is a fixed rate (10 to 30 year fixed term).

Borrow More & Pay Off Sooner!

In many instances, a borrower may be able to lower the payment and/or term of their current loan. For instance, if the current loan is at a higher rate, they may be able to refinance that balance, take money out, and still have a lower payment. Or, they may be able to lower the term. In this example, someone may have 25 years left on a loan and change to a 15 year term and only have a slightly higher payment, even with the funds they are using for renovations.

2nd mortgage2. Home Equity Loan

The second option is a Home Equity Loan, and though it can be a better option, there are only limited times that is the case:

  • When the interest rate on any outstanding mortgage is very low
  • When one only needs a limited amount of funds, and when one has the ability to pay the Home Equity Loan off quickly.

A Home Equity Loan is generally a "second mortgage" and is also most often a "variable rate" so one must weigh the pros and cons of this direction with the one's financial position, the amount one needs and the time the loan expects to be outstanding to better compare it against the features of a "cash-out" refinance.


Maybe it's time to design that outdoor kitchen you've always wanted, or add that guest suite for company. Realizing your dream home could be closer than you think. If you've been tossing around the idea of a large renovation, you can Apply Online with Jason Hebert.  

If you'd like more information about how much your improvements will go towards increasing the value of your home, or if you'd like a referral for a local contractor, we're happy to advise. Just call (850) 325-0004 , or email Tim for more information.


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Tim Shepard, Broker/Owner
Destin Real Estate, LLC
Cell: (850) 259-4133
Toll Free: (866) 678-SOLD

https://www.browsedestin.com

 

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