Using Home Equity to Renovate & Remodel Your Home
General Remodeling
Everyone can identify at least one area of their home they wish were a little different. But budgeting for a home renovation or remodeling project can make achieving dream-home status seem far out of reach. However, some homeowners may be able to afford the cost of home remodeling by using a home equity loan.
If you’re curious about using a home equity loan for your home remodeling project, find out all you need to know by reading our blog.
When you’re ready to schedule your design consultation, contact the Blackdog Design/Build/Remodel team to get started today!
What Is a Home Equity Loan?
Home equity loans are loans that homeowners can take out in the amount of equity that already exists on their homes. For example, if you have $50,000 in equity on your home, you can use a home equity loan to use that money for home improvements. This allows homeowners to achieve the home aesthetic they desire while adding additional equity to their homes through the renovation projects they select.
There are different types of home equity loans that homeowners can use to fund their home improvement projects. Standard home equity loans are structured like a traditional mortgage, complete with a structured repayment period and schedule of payments, including both principal and interest. These loans typically come in terms of 10, 15, 20, or 30 years, and lenders will only loan you between 80% and 85% of your home’s current equity.
Alternatively, homeowners can choose a home equity line of credit (HELOC). A HELOC is a lot like a credit card, allowing homeowners to use as much or as little as they need, paying back only the amount that is used. Interest rates are typically lower for a HELOC; however, most have variable rates, meaning the interest you pay will fluctuate and affect your monthly payments.
When Should You Use a Home Equity Loan to Renovate or Remodel?
Before choosing a home equity loan to fund your home improvement project, you’ll need to first determine if doing so is appropriate for your circumstances. Consider the following when deciding whether or not a home equity loan is right for you:
- Resale Value: If you’re planning a home renovation project that has high resale value — such as a kitchen remodel — the equity you add to your home as a result may outweigh the risks associated with taking out a loan.
- Emergency Situations: Sometimes by not taking on a home remodeling project, your home may suffer further damage. If this is the case, it’s best to take out the loan you need to address the situation before it escalates further.
- Relocation Planning: If you plan to relocate in the next 5-10 years, taking out a home equity loan to fund your home improvement projects can provide you with a strong return on your investment when it’s time to sell your home.
Always consult with your loan officer or financial advisor prior to making a decision about using your home’s equity to fund a home improvement project.
Blackdog Design/Build/Remodel for Your Home Improvement Projects
Whether you’re using your home’s equity to support your home remodeling dreams, or are tackling a home renovation with personal savings, Blackdog has the team you need to get the job done right. From kitchen remodeling and basement finishing to whole-home renovations, our team has the skills and experience necessary to deliver the redesign of your dreams.
Get started on your home renovation. Contact us to schedule your consultation today!
