May 30, 2017
Thinking of refinancing your mortgage? Maybe you just
submitted your refinance application because you got a better rate or you’re
switching in to a fixed rate loan from a variable one? During the process, have
you also thought about making some home improvements along the way? While your
loan is in process, talk to your loan officer about financing options to not
only refinance an existing mortgage but also provide necessary funds for a remodel
or home upgrades.
The simplest way to pay for home upgrades is to pull out
cash in conjunction with refinancing your mortgage. Let’s say your appraised
value came in at $350,000 and your current loan balance is $200,000. You’ve had
a 5/1 hybrid loan for a four years and you’ve decided to switch to the
stability of a fixed rate loan. But you’ve also been thinking about redoing
both your kitchen and master bath with new hardware, appliances, tile…the
works. You speak with a contractor and get a quote for $30,000 for everything.
With a cash out refinance, you will not only refinance your existing loan but
pocket an extra $30,000 to make the home improvements on your own.
Another popular option is with an FHA 203(k) loan. The 203(k)
loan not only refinances the first mortgage but at the same time provide
necessary funds used to remodel or upgrade an existing home. There are two
types of 203(k) loans depending upon the amount borrowed. The minimum amount
for improvements is $5,000 up to the local limit for FHA loans. FHA 203(k) work
must be performed by a licensed and approved contractor. The funds for the
improvements are managed by a third party who will dole out the needed funds as
the improvements are made.
If you’re thinking of making some energy efficient
improvements, you can take advantage of the Energy Efficient Mortgage, or EEM.
This is a HUD program that can be used when refinancing to finance certain
energy efficiency improvements such as repairs or replacing the HVAC system,
caulking, double-pane windows and more. As long as it is determined the
improvements will reduce your monthly energy costs by more than the EEM
payment, the program can be used to finance these improvements.
For more information or questions about mortgage loans, please call (855) 757-8748.