5 Resources to Finance Your Renovations

If you’re looking to improve your Boise home’s value to get the top value before selling, it might cost you a couple of hundreds to thousands of dollars. If you need help financing your renovations , check out these five resources.

A Home Equity Line of Credit (HELOC) is an option homeowners and investors can apply for. It works like a line of credit as it’s similar in the sense that you withdraw funds and then pay back the borrowed amount with interest in monthly installments. HELOCs have two terms:

This is an appealing option for homeowners and investors since it’s flexible and typically has low closing costs and monthly payments.

If your home renovation requires a lot of money, or you need the sum in advance, a home equity loan is a good option. A home equity loan will provide you with the full amount upfront. The equity in the home is where the funds come from, which is why homeowners need a minimum of 20% equity in their home. It’s used as collateral by the lender when you apply for the loan. The benefits of this loan are easy to obtain, fixed interest rates, lower closing costs than cash-out refinancing, and when they’re used for renovations, they’re tax-deductible. The loan is similar to having a second mortgage because you’ll have monthly payments, and if you fall behind, the lender can foreclose on your home.

Cash-out refinancing is similar to home equity loans because you’ll also tap into your home’s equity. When there are low-interest rates, this is a good option. And interest rates are low, but they’re not expected to stay low! Many experts predict the mortgage rates to rise this year. Now would be the time to refinance your mortgage and keep the difference between the old and new loans, also called cash-out refinancing. Since home equity loans and cash-out refinancing are similar, it’ll depend on your home goals that will help you make the best choice. 

If you don’t want to mess with the equity you have in your home, then a credit card is a good external option. It’s also a good choice for smaller renovation projects. Applying for a credit card is simple and almost instantaneous. As another added bonus, opening a new line of credit and making on-time payments can increase your credit score. The downside to credit cards is their high-interest rates and late payment effects like late fees and penalty APRs. 

The last option is government-backed loans through the Federal Housing Administration. One option is a Title 1 loan that can be used for home renovations and repairs and buying new appliances. The other option is a FHA 203K loan. This is also used for repairs, but can even extend to buying a home that needs renovations. These two options don’t require homeowners and investors to have equity in their property and could be the best option if they have a low credit score. 

If you need help renovating your home , or choosing renovations to increase your home value , contact us ! Call us today at (208) 957-0870, email us at corby@boiseturnkey.com.