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Refinance a Mortgage to Make Home Improvements

For a brief, shining moment homes sold faster than real estate agents could get them on the market. That is no longer the case, but that doesn’t mean the situation is hopeless, just a little more difficult. The way to sell a home in a tricky market is to make sure it stands out from the other houses around. There are two ways to do this. You can have a house that was the sight of a notorious murder that is now haunted by the vengeful ghost of the killer, or you can invest in some simple home improvement projects. While the outlay for such projects is generally not substantially proportionate to the value of the home, it can be a significant amount of cash all at once. Therefore, the best way to approach such a project may be with a home equity loan.

A home equity loan is a loan taken out against what has been paid off on an existing mortgage, taking into consideration what is still owed and what the dwelling has been appraised at. Taking the lowest possible amount out to spruce up a home can have a very high return. The most likely areas that will need improvement include replacing the carpeting, or even pulling it up and putting down a different flooring material -- many of which are now being made so that the novice can put them down as easily and well as a professional – and of course, applying new interior and exterior paint. One aspect of home improvement that is often overlooked but can make at least as big a difference as any of the above, if not more, is a new door.

New door systems can be installed for as little as a few hundred, up to several thousand dollars--depending on what needs to be replaced and whether or not someone has to be hired, but they will increase the value of the home substantially. Once the improvements have been decided on and priced, the same needs to be done for the loan. Just as one would shop around for the best price in flooring, it is equally important to find the best mortgage and home improvement loan. Sometimes one’s existing lender will provide the lowest interest rate and the best terms; sometimes a competitor will see a chance and offer better.

It is prudent to shop around not just for interest rates, but also for loan type. They come in many forms: fixed interest rates, variable, adjustable, interest only, secured and unsecured and more. It is important to understand all the terms and risks. The borrower’s circumstances, finances and future plans will all help to determine which loan will be the best one to upgrade to.