Financing your home renovation

Home Renovating

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If you are interested in renovating your home, it’s important to hit the pause button before you start picking up the hammers. Do-it-yourself renovations can be a disaster waiting the happen, but professional work tends to be expensive. The good news is that contractors can add value to your home when you carefully select the changes that you want to make. Learn how to plan out and finance your home renovation below.

Determining the Right Renovation

While you may have your eye on a certain renovation that can add to your comfort, the type of renovation you choose plays a big role in how much value will be added to your home. Renovations that are generally considered to be good investments include kitchens, bathrooms and finished attics. Money pits include home office renovations, bedroom makeovers and garage expansions. No matter what kind of renovation you choose, remember to avoid overly personal touches that cannot be easily removed.

Budgeting Your Renovation

Budgeting will help you get started in two ways. You will know your limits when it comes to the scope of the renovation, and you will know whether you need to start saving up before you move ahead. It is recommended that you review your household budget instead of going with the amount that lenders offer through financing. While you may be approved for a hefty amount, your ability to comfortably pay back a debt is subjective based on your lifestyle.

Securing Financing

After you set a budget, it is time to look for financing. One option is to consult with your mortgage lender to determine whether you could tap into the equity in your home. Equity relates to the difference between what you owe on your home and its value. For example, imagine that you owe $300,000 on a $500,000 home. You have $200,000 in equity, but you will not be able to access all of this. Most lenders will let you borrow 80 percent of the equity you have in your home.

Refinancing is a method of tapping into the equity in your home. You can use your current mortgage lender to refinance, or you can look for a new lender. If you would like to explore your options, it is best to consult with a mortgage broker to compare offers.

Calculating Your Investment After Renovations

Your home is likely to be your most valuable asset, and renovations are meant to add to this value. If you want to assess the new value of your home after renovations are complete, you have to option to schedule an appointment with an appraiser. A real estate professional may also be willing to give an estimate of value, but you should be aware that the agent will expect you to sell with them.

Renovating your home can add value and beauty. Find the best deals for financing your renovation by using a mortgage broker to compare lenders.

This Post Has 2 Comments

  1. wonderful pointers! It’s every so often hard to know in which to start with renovations.

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