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From home equity programs and mortgage refinancing to government loan programs, homeowners have a variety of choices when it comes to how they wish to finance their renovations and improvements.

Most homeowners have a wish list of rooms and areas of their home they'd love to renovate. Much of the enjoyment in home ownership is the opportunity to continuously refine and improve your property. In most cases, the one thing that delays the renovation list is lack of funding. Home remodeling isn't cheap, but it's often a good investment if you can come up with the money to get the work finished.

Fortunately, today's homeowners have several options to help make their remodeling dream a reality.

Cash

When paying for projects with cash, you don't have to worry about the time and effort it takes to secure a loan, avoid debt and associated interest costs, and maintain financial flexibility! Unfortunately, not everyone has the means to pay out of pocket, especially when it comes to more expensive projects. But if you have cash to spare while meeting your other saving goals and essentials spending needs, then cash can be a great option.

Mortgage Refinancing

Refinancing your mortgage at a lower interest rate can lower your monthly payment and help free up some cash. There's also the potential to refinance with a cash-out option if you have equity in your home. If your mortgage interest rate is higher than today’s rates, use an online mortgage calculator to estimate potential monthly savings.

But keep in mind, you want to avoid extended your debt beyond the useful life of your renovations. Nobody wants to foot the bill for a second round of renovations while still making payments for the first round of financing!

Our partners at First Heritage offer mortgage refinancing options and competitive rates should you decide this financing solution is best suited for your needs.

Your Home’s Equity

If refinancing isn’t right for you, a home equity line of credit or loan can be a smart choice. A home equity line of credit (HELOC) functions like a credit card and provides you with a set limit to which you can borrow. No interest is charged on the unused portion of your line of credit. You can withdraw funds as needed, which makes this a good option for those with ongoing projects. A home equity loan can offer tax benefits similar to a mortgage, but without closing costs. The potential tax benefits will also depend on what the funds are used for. A home equity loan is a beneficial option if you need the full loan value upfront.

FHA 203k Loan

An FHA 203k Loan is a federal program that allows you to refinance your existing mortgage while rolling improvement costs into a new mortgage. The main drawback on this option is that you'll have to carry mortgage insurance for the duration of your loan, which can be a significant added expense.

Reverse Mortgage

Reverse mortgages are sometimes criticized for their relatively high cost compared to mortgage refinancing or home equity financing, and you have to be at least 62 to qualify. Reverse mortgages have the added benefit of not needing to repay the money until you move or sell the home.

FHA Title One Loans

If you're seeking $25,000 or less in funding and don't have equity in your home, the FHA Title One loan could also be a good option. These loans are insured by the government and offer competitive rates.

The Takeaway

Making major renovations and improvements is a serious financial commitment, so it's essential that you thoroughly explore your options. By securing the most favorable funding possible, you'll be in a stronger financial position and enjoying the remodeled home you envisioned! Connect with our mortgage experts to learn more and get the necessary information you need to help you make an informed decision about the best financial solution for you.