Evaluating your home improvement funding options isn’t nearly as much fun as choosing cabinets or planning an addition. But thoughtful consideration to these options could help you get everything you want from your project. Use this funding guide to quickly evaluate your options. If you are interested in learning more, please complete the form below to speak with a licensed Impac Mortgage loan officer.
Many homeowners tap their cash reserves to fund smaller home improvement projects. However, you’ll want to be sure you don’t drain your accounts to the point where you can’t cover any fiscal emergencies – experts recommend having enough savings for six months of living expenses.
Using a credit card is one of the easiest and most accepted forms of payment. Nearly all contractors accept credit cards and it’s a great way to rack up reward points or frequent flyer miles. However, we only recommend using a credit card if you can pay off the balance right away to avoid costly finance charges. If you charge $10,000 and make minimum payments at 12% interest, it will take 25 years to repay the debt, and you’ll pay more than $9,000 in interest for that $10,000 charge.
The cash-out refi has helped millions of homeowners finance major home improvement projects by enabling them to tap into their home equity and refinance their existing mortgage into a larger one. And with today’s interest rates, you could find that your monthly payment is lower -- even after you include your project costs. However, there are many factors to consider before moving forward with a cash-out refinance. Talk to a licensed loan consultant to learn whether this option would work for your situation.
FHA’s 203(k) program combines a renovation loan with either a refinance of your current loan, or a home purchase mortgage to fund major structural improvements, additions, or remodels.
Imagine, you could get up to *$208,500 worth of renovations. The lender’s renovation lending team helps supervise the project.
When your project will cost $35,000 or less, and doesn’t include structural repairs, use a streamlined 203(k) loan to quickly tap into cash for minor property renovations or upgrades, including appliances.
Expect to pay a higher interest rate than on a refinance. Works best for those who have ample home equity. If your home value falls, the bank can shut down your line mid-project, leaving you without the funds to finish.
*$208,500 is based on a Federal Housing Administration 203(K) loan of $417,000 in Los Angeles County, California – Renovation a mounts will vary by county – contact us for more details.
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