The pandemic brought about a number of unforeseeable changes. One of these was an increase in the number of people adding on to their homes. Building an addition gives you access to more space and is a great way to personalize your home to make it more of what you want. Below, we’ve discussed home improvement financing options for building an addition.
Building an Addition: Home Improvement Financing Options
Perhaps you’ve been spending more time at home because you now work remotely. Or maybe you have a family member that’s moving in. High home prices have caused a lot of people to rethink their situation. It’s now more affordable to have the whole family live together. So they’re adding on instead of buying another home. Whatever your reasons, you may be thinking about building an addition.
These home improvement financing options may be able to provide you with the funds you need to carry out your plans:
Home Equity Line of Credit
One way to finance an addition is to take out a Home Equity Line of Credit, or HELOC. This option allows you to obtain access to additional funds by tapping into your equity. A HELOC works much like a credit card. It’s a revolving line of credit with a variable interest rate. This option allows you to pay for your addition as you go by borrowing only what you need. Keep in mind, any money you borrow will have to be paid back.
Home Equity Loan
A home equity loan works similarly to a HELOC except that you receive the money as a lump sum. Interest rates are fixed with home equity loans, which is another way they differ from HELOCs. With a home equity loan, you may be able to get a large amount of cash all at once. But you’ll need to start repaying it right away.
A cash-out refinance allows you to replace your current mortgage with a larger one. The funds can be used to pay off your old loan and any remaining money is given to you in cash. This means you’ll have a new interest rate and terms. Generally, a cash-out refinance is only a good option if the rate for your new loan will be lower than your existing one.
Other methods that homeowners use to pay for an addition include personal loans, credit cards, personal lines of credit, and cash.
Explore Home Improvement Financing Options
Call Mortgage Solutions Financial today to begin exploring your options!