Financing Your Home Renovation
Even if you have the cash to fund your renovation or addition, you still may want to review your financing options to see if there are any tax savings or other reasons to hold onto your cash. Some financing options are:
A Home Equity Line of Credit
This is a line of credit using your home as collateral. Typically, lenders will give you a line of credit set at 75% to 80% of your home’s appraised value minus the outstanding mortgage balance. In a remodeling situation, make sure you ask your lender if they will consider the value of the planned improvements when calculating the appraised value.
FHA Title I Home Improvement Loan
A FHA Title I Home Improvement Loan is a loan specifically for the improvements you have planned. In this case, a lender will loan you money for your renovation based on an appraised value of the improvements. Typically, the lender will require that you pay interest only on the loan until the construction is completed and then the loan will be converted to a typical mortgage.
Loans provided by Admiral Bank (15 Park Row West, Providence, RI 02903) on approved credit, for a limited time. Repayment term is 48 months. 0% fixed APR. Minimum loan amounts apply. The first monthly payment will be due 30 days after the loan closes.
Some thoughts about financing your project:
Be sure to have money set aside for any unanticipated expenses related to your remodeling project.
Lenders will consider your credit history and ability to pay. Contact your mortgage lender and/or your financial advisor for more information relating to your specific situation before you get too far into the remodeling process.
The tax laws are always changing. Talk to a tax consultant to help you determine your best financing options.
Most banks and mortgage companies offer the types of financing mentioned here. Shop around to make sure you’re getting a good deal.
We also accept these major credit cards: