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Remodeling My Home with a Home Equity Loan
Author David Schneider | May 23,2007
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Connie and Walt had lived in their home for about 10 years and they thought the décor was dated. The couple had two options. They could wait until 80s home décor came back in fashion, or they could cash out the equity in their home to pay for the complete remodeling of their home. The couple thought about it for a while and decided that they needed more information about home equity loans before they could go ahead with their remodel. The couple met with a lender and Walt asked, “We are thinking about remodeling my home with a home equity loan. Do you think this is a good idea?” The lender shook his head yes, and then showed them why.
Remodeling My Home with a Home Equity Loan
Remodeling your home with a home equity loan is a great idea. First, the interest charged on this type of loan is usually tax deductible. Secondly, home equity loans offer better interest rates than unsecured personal loans and credit cards due. Finally, by using your home equity to finance your home remodel you will improve the value of your home, and in turn, increasing your equity vestment.
Before you take out a home equity loan, you should first figure out what your remodel is going to cost and when you are going to need the money. To figure out what your remodeling project is going to cost you can either make an estimate of the cost yourself, or you can request that a contractor come in and give you an estimate. Next, you will need to determine if you will need all, or most, of the money for the remodel up front, or if you will spread your expenditures over several months.
Next, determine what type of home equity loan you will need. If your remodeling project is going to be very expensive then you may want to use a 125 percent home equity loan to cover the cost of your projects. If you will need all, or most, of the money for the project up front, then you will want to utilize a home equity loan that offers lump sum payments upfront. This will include 125 percent home equity loans, 110 percent home equity loans and 100 percent fixed rate home equity loans. Finally, if you will spread your remodeling expenses over several months, you will want to take out a HELOC. The HELOC will provide you with access to the money that you need when you need it, without having to pay interest charges on the money that you haven't spent yet.
Your final step is to finalize your mortgage and remodeling plans. In this step, you will need to apply for your home equity loan, close on the loan and receive your money. To finalize your remodeling plans, you will want to hire a contractor (if you are using one), create a remodel plan for your home, select the items that you will need to buy and create a timeline for your projects.
Get Lenders Involved in Your Plans
Now that you have decided that remodeling your home with a home equity loan is something that you want to do, you next need to find a lender to work with. The lender that you select should offer you the loan program that you want with the terms that make you happy. Let QuoteMatch.com help you find a good lender. Request your mortgage quotes today. |
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