A study conducted by ABCD Publishing revealed an anticipated surge in home remodeling projects across the U.S. in 2007. Most consumers are using their home improvement loans to pay for more space -especially extra bathrooms and bedrooms-with kitchen upgrades still at the top of the wish list. More than half of the people surveyed said they plan to do home improvements that will create special design features in their homes, and 20 to 25 percent defined that kind of strategy as one that will make their homes more comfortable or help them "create their dream."
Funding your dreams
To fund your domestic dreams, many experts recommend a mortgage refinance to strategically take advantage of the equity in your home. Here are four home refinance approaches that are especially popular for remodeling projects:
1. Cash-out refinance: Borrow more than your current outstanding mortgage. The loan will cover application fees and closing costs, and you can still walk away with extra cash in your pocket.
2. HELOC: With a home equity line of credit (HELOC), you can withdraw money as needed, like you do with a credit card, for purchasing building materials in phases.
3. Cut costs by switching rates: If you have an adjustable-rate mortgage, shift into a conventional fixed-rate loan. You might save enough to help pay for your renovation while adding valuable equity.
4. Change the payment terms: Some loans let you choose how much interest to pay each month. If you refinance mortgage into one of those, you can adjust your household mortgage budget every four weeks to help accommodate remodeling expenses.
More than ever before, homeowners in 2007 will do all or part of the hands-on work themselves, by taking advantage of their neighborhood home improvement stores. Save the real muscle for the remodel, because when it comes to paying for home improvements with sweat equity, you really don't have to sweat the money. The only heavy lifting involved is a basic mortgage application, a search for competitive rates, and a little crunching of numbers.
