Home improvements can transform your living space. Some home upgrades make it easier to function in your home, while other upgrades are stylistic choices based on your preferences.
The average homeowner in the United States spent more than $7,500 on home improvements in 2018. Some homeowners may save the funds before making upgrades, while others may opt to use a line of credit, credit cards, or refinance their mortgage to pay for the improvements. Read on to consider whether you should refinance your mortgage to pay for upgrades and what other options you have for paying for home improvements.
Some home improvements increase your property value.
Smart upgrades add to your property’s value. The payoff in your property value is critical if you’re renovating with plans to sell your home. Still, if you’re investing in upgrades to increase your enjoyment of your home, it may be a secondary consideration. Some upgrades that yield the highest increases in property values include renovated bathrooms, kitchens, and attics.
Investing in your home’s exterior can also have a big payoff. Landscaping transforms your outdoor spaces and improves your home’s curb appeal. When you invest in landscape design in Denver, for example, a landscaping company will use flowers, shrubs, and trees to transform your yard. Landscapers can design your yard and maintain it, ensuring you enjoy the perfect garden design all season long. Whether you have ample outdoor space or a small space, landscape architects can develop a design plan suitable for your needs and preferences.
Your landscape architects can add other outdoor features, such as a water feature or fireplace. You can also have an irrigation system constructed to make it easy to maintain your lawn.
Are interest rates higher or lower than when you took out your mortgage?
There are several factors to consider when refinancing your mortgage. The life of the loan you currently have and your current mortgage payment are two factors. Suppose current mortgage rates are lower now than they were when you applied for your initial mortgage loan. You may be able to refinance your mortgage and finance home improvements and still lower your monthly mortgage payments, but it will depend on the loan amount you’re seeking. You may also have to pay penalties to terminate your current home loan and qualify for a new home loan.
Suppose you’ve paid off your student loans or other debts since you took out your mortgage. You may be able to afford higher mortgage payments. It’s also possible you can access funds through your home’s equity if your home’s value has increased significantly.
Use a mortgage loan calculator to determine how much money you’d spend on your refinanced mortgage each month. You can use a loan calculator to compare costs based on the amount of the loan and the loan’s term. You may pay more in monthly payments if you opt for a 15-year mortgage instead of a 30-year mortgage, but you’ll reduce your total payments by decreasing the amount of interest you pay over the life of the loan.
What other options can you consider for financing your upgrades?
You may be able to save the funds you need and pay for the improvements without applying for a loan. This approach could take longer, and you may prefer financing your home improvements to reduce the amount of time it takes to complete renovations.
Some homeowners can qualify for a line of credit. A line of credit is a loan provided by a bank or credit union. The borrower is charged interest when they use some of the funds. Interest on the amount borrowed is charged monthly. There’s no fixed repayment term.
Personal loans involve applying for a loan from a financial institution. If approved, the amount you’re borrowing is placed in your bank account. Borrowers make fixed monthly payments to repay the personal loan and the interest charges. These loans come with a fixed term for repayment. You can use your credit cards to finance home upgrades. However, credit cards charge higher interest rates, and the interest charges will increase the overall cost of your renovations.
Multiple factors determine whether it’s worthwhile to refinance your home loan to pay for improvements. Consider the interest rates, life of the loan, and other financial factors, such as whether you’ve paid off your student loan debt or other debts and can afford to increase your monthly mortgage payments. You can also consider applying for other types of loans, such as a line of credit or a personal loan.