Home Equity Archives - Clean N Dry Today

Which Home Equity Loan Is The Best Option? There are a number of significant advantages that come with homeownership, and one of the biggest advantages is the ability to take out a home equity loan. As homeowners pay off the mortgage, the amount of equity in the house increases. Homeowners can borrow against the equity in their house to fund other projects. For example, homeowners could borrow against home equity to complete a home renovation, pay medical expenses, or pay down student loans. The most common home equity loans include cash-out refinances, a traditional home equity loan, and a home equity line of credit. Which is the best option?

A Cash-Out Refinance

The first option is called a cash-out refinance. Essentially, homeowners are taking out a loan for an amount that is greater than the current mortgage. Then, homeowners will keep the difference in the two loan values for their personal use. Homeowners essentially refinance the existing mortgage and extract additional equity. There is only one mortgage payment, and any interest on the new loan is tax-deductible.

A Home Equity Loan

The next option is a traditional home equity loan. Homeowners borrow against the existing equity in the home, and homeowners create a second mortgage. There is a fixed interest rate on the second mortgage, and homeowners receive the money as a lump sum. It is not unusual for the interest rate on the second mortgage to be higher than the first mortgage. Then, they have to pay off the second mortgage just like the first mortgage.

A HELOC

Homeowners who are okay receiving the funds over time might be interested in a home equity line of credit, also known as a HELOC. The initial interest rate on a HELOC is often lower than the mortgage, but it can vary with time. Payments are often lower because homeowners only owe money if they actually use the line of credit. Interest is only charged on the outstanding balance.

Choose The Right Option

Homeowners need to understand the differences between these home equity loans to choose the best option for them. Some of them provide lump sums, some create multiple monthly payments, and some have more flexible payment terms. The features of each loan must be compared to the needs of the individual homeowner.

Three Hot Renovations That Will Boost Your Home's Value Without Breaking the Bank Are you feeling the “renovation itch” or perhaps looking for a fun project that you can take on which will provide you with a return on your investment? There are numerous home upgrades and renovations that can add value to a home without costing a large sum of money to complete.

Let’s take a look at three popular home renovations that can increase your home equity without draining your bank account.

Paint Your Home Inside and Out

Painting the interior or exterior of your home costs very little when compared to how much it can freshen up your home’s appearance and increase its value. Painting is also an excellent time to get rid of any old wallpaper or other decor touches that are outdated. Spend some time browsing through Pinterest or through home improvement websites in order to choose a color palette that is warm and inviting without being too bold. Remember, if the goal is to increase your home’s value you’ll need to paint using colors that buyers will find attractive.

Upgrading Your Windows

If your local environment is cold or wet during parts of the year you may find that upgrading your windows improves your home’s appearance and provides you with some additional savings in the form of reduced energy costs. Look for windows that are energy-efficient and that are guaranteed to eliminate drafts. Depending on the area of the country that you reside in, you may find that windows that are insulated with vinyl or aluminum are your best bet.

Finishing Your Basement into a Suite

If you have an unfinished basement which has a lot of space and running water you may want to consider finishing it in to a full basement suite. Some buyers will be enticed by the additional rental income that can come from a suite, while others will be excited at the opportunity to provide an older child or family member with their own suite inside of the same home.

You’ll find that investing a little time and money in your home now can pay huge dividends later when it’s time to sell and move on.