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Refinancing Your Home For A Remodel
Refinancing your home for a remodel is one way to invest in your property's value and your quality of life.
By: AAmerican Property Management
Refinancing your property for a remodel is one way to obtain the money to complete such a project. However, there are other options. For instance, obtaining a line of credit, borrowing against a retirement account, cashing out an investment account, or, just using an existing or new credit card. But, not all of these are viable alternatives.
For example, a line of credit might not provide sufficient funds, whereas borrowing against a retirement account wipes out any gains that would be made during the loan in repayment. Also, cashing out an investment account will almost certainly trigger penalties and taxes, while using a credit card with a high-interest rate is also an unattractive method.
Refinancing to complete a home improvement project might be the best option for a few reasons. First and foremost, the money is going right back into your property, increasing its overall value and thereby increasing its equity gains in future years. Additionally, refinancing your house for a home improvement usually requires the funds to go toward your project and not other expenses. (This is one problem people have with using lines of credit because these types of loans can be used for anything.)
Still, it is important to understand what it means to refinance for a home improvement project. Refinancing means pertaining an entirely new home loan, and does not constitute restructuring your existing mortgage. In other words, refinancing requires an appraisal of the home's value, a closing, and many of the other elements that are done during a home purchase.
Fortunately, most or all closing costs can be rolled into the refinancing package and the appraisal will substantiate the property's actual market value. What's more, since interest rates are still at near historic lows, it's entirely possible to lock in a lower interest rate, saving money over the long term.
For these reasons, it is imperative to shop refinancing products among various lenders, including your bank or credit union, regional Banks and credit unions, and other refinancing providers in order to determine which is the best for your specific situation.
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