26
Jan
By support
Home Mortgage Tips

A Guide to Financing Home Improvements and How Mortgage Refinancing Can Help

A Guide to Financing Home Improvements and How Mortgage Refinancing Can HelpIf you’re planning to remodel or renovate your home in the near future – whether to provide a better living environment or as part of a house flip – you’ll need to find a way to pay for your home improvements. There are several different possible sources of renovation money, each with their own advantages and disadvantages. One option that is gaining popularity is mortgage refinancing.

How does mortgage refinancing work, and how does it compare to other renovation financing options? How can you use a mortgage refinance to get the most out of your renovation? Here’s what you need to know.

Home Improvement Investments: Which Renovations Generate The Best Returns?

If you’re considering a mortgage refinance in order to fund your home improvements, you’ll want to concentrate on doing renovations that increase your home’s value. Otherwise, you’ll be taking on more debt without gaining anything in return.

If you want to max out your return on investment, re-finishing your kitchen is your best strategy. Remodeling Magazine’s annual cost-to-value renovation analysis shows that new appliances, a new coat of paint, and new surface finishes in the kitchen generate the biggest returns. Meanwhile, swimming pools and home offices tend to generate the lowest returns because they appeal only to a select group of buyers.

Your Options For Financing Home Improvement Projects

Financing for a home improvement project is a critical consideration. Unless you can afford to pay $20,000 out of pocket for a remodeling project, you’ll need to secure financing of some sort.

Your options for home improvement financing include home equity lines of credit, renovation mortgages, and refinancing. A HELOC may not be an ideal solution, as repayment requires discipline, while a renovation mortgage (or home renovation loan) is typically used only for foreclosures and other properties requiring major renovation work.

Mortgage Refinancing: A Smart Option For Savvy Borrowers

If you’re looking to simply make improvements to your existing home, a mortgage refinance is likely your best option. A straight refinance gives you a lump sum of cash that you can use to pay for renovations upfront.

There’s also a “refinance plus improvements” arrangement, which can provide you with extra capital as you need it. Under this model, you can get up to 80% of your home’s post-renovation appraisal value – however, you’ll only get the money as the renovations are completed and inspected. With a straight refinance, you’re not out of pocket for any length of time.

Making smart home improvements is a great way to boost your home’s value and improve your living conditions. An experienced mortgage professional can help you to find financing for those renovations without a hassle. Contact your local mortgage advisor to learn more.

21
Jan
By support
Home Mortgage Tips

The Do’s and Don’ts of Getting Approved for a Mortgage Quickly

The Do's and Don'ts of Getting Approved for a Mortgage QuicklyIf you’re ready to buy a home, getting approved for a mortgage is a critical step that you can’t skip or rush. And although it may seem like the lenders can be a bit arbitrary in their approvals, there’s actually a detailed set of criteria they look for when approving or denying an application.

So how can you ensure your mortgage gets approved quickly and without any hassles? Here’s what you need to know.

Do: Have All Your Documents In Order Right Away

Processing the paperwork on a mortgage approval is one of the most time-consuming parts of getting a mortgage. And if you forget to include a form or fill something out incorrectly, it may take your lender days or weeks to sort out the problem. So before you go to your lender to get approved, make sure you have all of the necessary documents and that they’re all filled out correctly – it’ll save you a great deal of time later.

Don’t: Accept A New Job Or Start A Business While Closing

Once it comes time to close on your mortgage loan, you’ll want to keep your finances as consistent as possible until after the closing. Any change to your financial situation can throw a wrench into the approval process and delay your loan. If you’re planning to quit your job to start a business, accept a new job, cut back your hours, or go on parental leave, wait until after the home sale closes.

Do: Get Pre-Approved With Your Lender

One simple thing you can do to greatly speed up the approval process is get pre-approved. If you’ve already been pre-approved for a mortgage through a certain lender, then securing a mortgage through that lender will be a very smooth process – and in some cases, a pre-approval can speed up your mortgage approval by a week or even more. With a pre-approval in hand, the only issue that remains to be settled with the lender is providing them with your new home address.

Don’t: Co-Sign A Loan For A Friend Or Relative

Any major purchase or new debt of any kind will read as a serious red flag for your lender, one that will take time to sort out. Your lender will do a second credit check just before closing the mortgage, and any new loan amounts can delay or stop the approval. So if a friend or relative asks you to co-sign their loan, wait until after your mortgage is approved.

Getting approved for a mortgage can seem challenging, but by following a few simple rules, you’ll make it easy for your lender to sign off. For more mortgage approval advice, contact your trusted mortgage professional today.

13
Jan
By support
Home Mortgage Tips

Owning vs Renting: Why High Rents Are Worse Than a Mortgage over the Long Term

Owning vs Renting: Why High Rents Are Worse Than a Mortgage over the Long TermIf you’re at the stage in life where home ownership is nearly within your reach, you’re probably wondering whether you should start looking for a home or whether you should just keep renting. Renting is easier, people say, and it gives you more mobility. But over the long term, all that rent money can really add up – and it eventually reaches a point where buying a home is a better deal.

So why is paying a high rent a worse option than buying a house and getting a mortgage? Here’s what you need to know.

Renting Doesn’t Generate Equity

One of the single biggest sources of wealth in the United States is home equity – as you pay down your mortgage, you invest more and more of your money into your property, and it appreciates in value. When you eventually sell that home, you make a profit. The monthly payment is something you’d have to make anyway, whether you rent or own – but when you rent, your monthly rent money lines someone else’s pockets, while when you own, paying down your mortgage actually creates wealth for you.

Renting Doesn’t Give You Access To Homeowner Tax Credits And Deductions

There are all sorts of tax benefits available to homeowners that renters simply can’t access. As a homeowner, you can deduct your mortgage interest from your taxes owing, reducing your taxable income – but there’s no such deduction for renters. You can also deduct property taxes and some closing costs when you buy a home – there are no corresponding tax benefits for renters.

There are also several tax credits available to homeowners that aren’t available to renters. Things like renovations or simply buying a home for the first time can give you tax benefits that renters can’t access.

If You Can Muster Up A Down Payment, Owning Is Cheaper In The Long Run

One of the biggest hurdles keeping young people out of the real estate market is the down payment. It’s not easy, but if you can save up enough money for a down payment, you’re actually better off buying a home than continuing to rent.

According to Trulia, the median home price in metro Houston in Texas is just under $163,000, while the median monthly rent for an apartment is $1,550. That means renting would cost $18,600 per year, while buying a home (assuming a 20% down payment and 30-year term) would cost $9,384 per year in mortgage payments. In other words, owning is about half as expensive as renting in the long run.

Renting may be a good short-term solution, but over the long haul, owning is almost always better. Call a local mortgage professional to learn more.