Some homeowners opt to renovate as opposed to upgrading to a larger home. With additions, you may personalize the space and ensure it matches your specific needs. Knowing how to finance property renovations in MA can be helpful. Below are a few commonly used ones.
Home Equity Line Of Credit
If your property is worth a lot higher than what you currently owe, look into a home equity line of credit. Most lenders will allow you to borrow up to roughly 80 percent of the market value of your property. A Home equity line of credit has low rates and no closing costs. Interest payments might be tax deductible (consult with an accountant to find out). Be aware that the loan length is normally shorter and applicable rates can change.
Unsecured loans are not a perfect alternative but certainly may be a method to finance property renovations. Interest rates are usually higher on unsecured loans than other types of loans. Furthermore, amounts paid for interest will not have tax benefits. Many people use these loans as a transitional solution. Once renovations are completed, your property value will be higher. This might allow you to then obtain a home equity line of credit or attempt refinance an existing loan. That can subsequently be used to pay off unsecured loans.
Refinance An Existing Loan
Refinance an existing loan to a higher amount allows you to access some of your equity without multiple loans. This can also be a great way to spread your property renovation expenses over a longer length of time and secure a fixed interest rate. The amount of equity that you may access depends on the particular mortgage program and the current property value. Remember that there are usually closing charges associated with refinancing a mortgage (because it is really an entirely new mortgage).
How To Finance Property Renovations In MA
Contact an experienced lender for a pre-approval on these options. Additionally, there are usually special property renovation loans for which you might qualify. Regardless of which alternative you select, keep in mind that your ongoing monthly home expense will be higher as a result. Before making a decision, know what you can afford and what work falls within that budget. The information on how to finance property renovations in MA above are offered only as a general guideline.