Yes! There are those moments in life when you want a to move to a new home or get more space or just any kind of change regarding your current living residence. But then you love your current neighborhood so much that you don’t feel like moving. Or you have emergency home repairs that have to be done immediately. In such a case, what do you do? Talking to the Northcash team will be the best shot.
Well, the answer is quite simple; simply make your dream home from the home you are currently living in. And yes, there are various options that you can consider when it comes to the financing you need to renovate your current home to fit your dream home without necessarily having to break the bank.
The other thing you need to know is that a home renovation usually requires a team of different players to manage this fete fully. You will need a lender, of course, an architect, and a financial and tax advisor as well. You also need to be aware of the merits and demerits that come with each of these financial options.
This article talks about three popular financing options that you can opt for as a homeowner.
- Take a second mortgage
Applying for and getting a second mortgage will give you the opportunity to take a loan that is based on the equity of your current home as well as your income. You can know your home equity current value by subtracting the current balance that is left on your current mortgage from your home’s current market value.
Pro: once your second loan is approved, you will get an advance lump sum and will be expected to pay a certain monthly fee that is subject to fixed interest rates. The length of a second mortgage is usually shorter when compared to the first mortgage. You can use the second loan to improve your home’s overall value.
Con: the interest rates of these second loans are usually higher when compared to the market interest rates.
- Renovation financing loan
You can always go for a renovation loan if you feel you don’t have enough cash in your account to a home renovation. The lenders usually base the loan to lend you with the worth that your home will be after the renovation has been done.
Pro: you don’t need to have equity in your home since the loan that you will receive will be based on the market value of your home once the renovations are done.
Con: your mortgage balance will increase as a result of having a refinance with a larger amount.
- Cash-out refinancing
This method is somehow similar to renovation financing only that the lenders now base the amount of loan to lend you based on the current market value of your home as it is now.
Pro: you directly receive all the amount given to you by the lender in one cash payment. You get to have more flexibility with this option.
Con: always ensure that you follow the interest rates so that you don’t get a higher interest rate that the one you are currently having.