With the stubbornly high rates in today’s real estate market—especially compared to the sub-5% fixed rates that are still held by many—it’s becoming more common for homeowners to choose to stay in place longer and enhance their existing properties rather than navigating the complexities of selling and buying anew. These are often prudent investments that improve lifestyle and even may help facilitate more earnings (not to mention directly increasing the value of the home), but they also require costs beyond the cash that most homeowners tend to keep on hand.
In his presentation today, Jeremy Shaffer of Premier Bank shed light on four effective ways to finance these home improvements, each with measures to ensure your investment not only adds comfort to your home, but also value.
Here are the key financing options he detailed, each using your home as the primary piece of collateral:
Home Equity Line of Credit (HELOC)
This common choice allows you to finance up to 80% of your home’s current, unimproved value with an adjustable rate that tends to be highest among these options presented, but lower than most other short term credit options.
Home Equity Loan
This one-time loan with a more stable (often fixed) rate and term is ideal for significant, well-defined one-off projects.
Cash-Out Refinance
Best for use with large projects or other major changes to life or the market—this option involves replacing your current mortgage with a new one that’s up to 75% of your home’s current value, allowing you to access the cash difference after the old loan is paid off, and resetting your payment term up to 30 years, as desired.
Construction Mortgage
Leverage your home’s anticipated value after upgrades with this loan, best for upgrades that significantly increase the home’s overall value and size (major additions, second floors, etc) offering a short term interest-only payment period, followed by conversion to a standard 30-year mortgage.
For those looking to expand or renovate their homes, Premier Bank can has a great team of experts who can help make financial decisions that are well-informed.
Connect with Jeremy to delve deeper into these options. Consider visiting next week or joining Border 2 Border to harvest and harness more amazing collective wisdom from this group!
