Been putting off a home improvement project until you have more cash on hand? Or maybe the price tag on a design or remodeling project you’ve already started has grown. Either way, taking advantage of the many financing options available can get you to the finish line of living more happily in your home sooner than you might think. Here, we explain the different types so you can choose the right one for you.
Equity-Based Financing Options
If you made a big down payment on your home, paid for it outright or have lived in your home long enough for there to be a substantial difference between your home’s market value and the amount you still owe on your mortgage, you can borrow against that home equity. There are three types of renovation financing based on equity.
1. Home Equity Loan
Sometimes called a second mortgage, a home equity loan uses your home as collateral and usually allows you to borrow 80% to 85% or more of your equity, distributed as a lump sum. So, for example, if you bought your home for $500,000, have $200,000 left on your mortgage and borrow 80% of your equity, your loan would be $240,000. The interest rate is fixed.
Read More: https://www.houzz.com/magazine/10-ways-to-finance-a-home-remodeling-project-stsetivw-vs~180348456