Need To Do A Lot Of Home Improvements? 3 Tips To Get The Money You Need
If you have not made any home improvements for a long time and would like to update your home, there are many ways you can get the money you need. Below are three of these ways so you can get started with these improvements.
Home Equity Loan
If you own your own home, you can get a home equity loan. Equity is the difference between what your home is worth and the amount you owe to the mortgage company A home equity loan is a loan that is based on the amount of equity you have, such as what your home is worth. You will often hear a home equity loan referred to as a second mortgage. You will borrow a fixed amount and make payments over a period of time, such as a 15-year term payment. You can also choose a much lower period of time, such as five years. A home equity loan has a fixed rate so your payments will always stay the same. Interest rates are generally low.
Home Equity Line of Credit
A home equity line of credit (HELOC) is borrowing a certain amount of money on your home.
The equity in your home is used as collateral. This means if you do not pay the loan, the bank can take your home. In many cases, the interest rate on HELOC is much lower when compared to a credit card. These loans also have a variable interest rate, which means the rate changes depending on the current market conditions.
A HELOC is revolving debt and you have to make minimum monthly payments. This is much like a credit card. As you pay down your loan you can draw money out of it again.
This is a good option for you if you currently have a high interest rate and high payments on your current home loan, as you will likely get a lower interest rate, which will reduce the amount of your monthly payments. With this loan, you can also take cash out of your home for things like large purchases, home renovations, etc. You can completely change mortgage companies if you prefer. For example, one mortgage company may offer you a lower interest rate than another.
It is a good choice to refinance when you have equity on your home.
Your bank can go over these loans with you in much more detail so you can decide what would work best for you. For more information, contact companies like GE Credit Union.