Summer is the perfect time to tackle home maintenance and renovation projects. Whether you’re looking to remodel the kitchen or install a new master bathroom suite, working on your home over the summer means you won’t have to contend with winter’s inclement weather and short dark days – but of course, there’s still the challenge of how to pay for your remodel.
Financing Home Improvements
One great option for homeowners is to use a home equity loan or line of credit to finance home improvements. Tapping into your home equity lets you access low-cost funds by using the value of your house as collateral – so instead of waiting another year to save up and start working on your dream home improvement project, you can kick-start the remodel this summer.
Borrowing with a home equity loan or line of credit offers two key advantages over borrowing with a personal loan or credit card. Firstly, the interest rate will be lower; and secondly, the interest you pay is often tax deductible. These benefits make home equity borrowing a very attractive choice for homeowners looking to invest in an upgrade project.
HELOC or Home Equity Loan?
If you’re considering tapping into the equity of your home for summertime renovations, it’s important to understand the difference between a home equity loan and a home equity line of credit.
A fixed home equity loan will disburse funds in one lump sum, making this the ideal solution for a one-time home improvement project. On the other hand, a home equity line of credit (HELOC) firstly establishes how much credit you’re approved to borrow, and then gives you the flexibility to withdraw funds whenever you need them. For lengthy home renovation projects that could involve multiple steps, a HELOC might be a more attractive option than a one-time loan.
Whether you choose a home equity loan or a line of credit, keep in mind that in both cases you are using your home as collateral – so it’s important to keep up with payments to avoid any potential repercussions for your finances, or your home. It is therefore essential to go into any home improvement project with a good sense of budget and costs.
The right renovation project can increase the value of your home and boost your quality of life all year long. If you’re considering some home improvements this summer, start by scheduling an appointment with one of HUECU’s Mortgage Loan Originators who can take you through the borrowing options and see what makes sense for you.