Types of Home Repair Finance

When it comes to home repair finance, you have several different options from which to choose. Here are the types of loans we can offer you.

Cash-Out Mortgage Refinancing

If you have equity in your home, you can refinance your existing mortgage for a larger amount and then take the difference in cash for home repair finance. You can even structure your home repair finance loan to keep your mortgage payments the same by extending the term of your loan. Cash-out refinancing can usually deliver a lower interest rate than a home equity loan or line of credit. Sometimes, if your home improvement project involves structural changes to your home, your lender may approve your home repair finance loan based on the estimated value of your home after the project is complete. On the down side, cash-out home repair finance will increase your interest costs if you choose to extend the term of the loan. Also keep in mind that this form of home repair finance requires considerably more paperwork and up-front fees than other types of loans.

Home Equity Loan

Another home repair finance option is a home equity loan. A home equity loan works in the same way that a traditional first mortgage would. A home equity loan is secured against the value of your home, and you pay it off for several years. Home repair finance with a home equity loan usually offers a fixed interest rate that is slightly higher than those of first mortgages. On the other hand, your closing costs will be lower with a home equity loan than with a mortgage. This type of home repair finance is ideal if you have a large sum of money that you have to pay up-front for your home renovations.

Home Equity Line of Credit

You can also use a home equity line of credit for home repair finance. A home equity line of credit is ideal if you don't know how much your project will cost or if you need to pay in increments. When you apply for home repair finance with a home equity line of credit, your lender will approve you to borrow up to a certain amount of money. You then access this money as you need it with a credit card or checkbook. You will pay interest only on the amount you borrow, and you can choose how much you pay each month. This is one of the advantages of a home equity line of credit-your payments might be lower because you can opt for an interest-only payment. However, the full loan amount will come due in several years, and you will need to either refinance or pay the entire loan in cash if you haven't paid down the principal. A home equity line of credit is ideal for home repair finance when you need to pay for smaller projects.

Personal Loan or Line of Credit

If you are looking for home repair finance for a relatively minor project, you might also consider a personal loan or line of credit. These types of loans are not secured against the value of your home. Keep in mind that these types of loans usually have higher interest rates than other forms of home repair finance. If you have any questions, please visit our frequently asked questions page.