Financing your Remodeling Project
Paying for a remodeling project doesn’t have to be painful. If you want to wait until you have the total amount saved in cash, that’s an honorable goal. If you’d like to move ahead sooner, there are several possibilities. Just visit your local banker and explore the finance options. While builders usually don’t finance, we do encourage clients to use their resources to get the necessary cash. We produce a payment schedule that is based on the scope and progress of the project and included in the agreement documents. The schedule is a guideline for the amount and timing of funds from demolition through final inspection. We don’t require a down payment, but every builder is different, so be sure to ask the question.
If you’re building an addition or a new construction home, you can look at a home mortgage loan or a construction loan. A construction loan disburses funds in increments as the builder requires them. The interest rate stays the same for the duration of the remodeling project, and the construction loan is often transitioned into a home mortgage loan automatically. This can be done in one settlement – check with your bank. Another option is refinancing your current home mortgage at a better interest rate and rolling the remodeling costs into the refinancing.
A home equity loan or line of credit is also cash to be loaned based on the equity you’ve built by paying your current home mortgage. If you have lots of equity in your home, it’s likely due for a remodel or an update. Let your banker know what you’ll be using the loan for – he or she may have other financing ideas that fit your needs.
