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4 Ways to Fund Your Home Improvement Project

Education Posted on May 12, 2021

Dreaming of a new bathroom, a spruce-up kitchen? We offer some of the easiest ways to unleash your creative potential and invest in your home’s long-term value.

After a full year, many Americans are continuing to reimagine the homes and rooms they’ve spent so much of quarantine in. Months of working from home tends to inspire daydreams about renovated bathrooms, remodeled kitchens, revamped dens, and repainted exteriors. The good news? These dreams could be realized pandemic or no pandemic — and can increase the value of your home for years to come.

That said, home improvements sometimes have upfront costs that your on-hand cash or savings can’t handle. Fortunately, there are numerous ways to finance that dream and take it from just an idea to a tangible asset you and your family can enjoy for years to come.

Home Equity Line of Credit

A home equity line of credit (HELOC), is a line of credit that is secured by your home, giving you a revolving credit line to use for large expenses, like home renovation projects. Your house is used as collateral for the line of credit. You can borrow as little or as much of your established limit as you need to throughout your draw period.

To qualify, you’ll need to have available “equity” in your home, which means the amount that you owe on your mortgage is less than the value of your home. Most lenders will allow you to borrow up to 85% of the value of your home, minus the amount you owe.

Personal Loan

If you’re looking for a simple, flexible option, a secured or unsecured personal loan can provide you with options. Individuals with small to mid-sized home improvement projects and a solid financial history can access a personal loan with flexible terms. With an unsecured loan, you won’t have to worry about putting your home up for collateral and you could save on closing costs.

Mortgage Refinance

If you used a mortgage to purchase your home or have one taken out on it, you may be able to unlock additional money each month simply by refinancing. This may be a smart move if interest rates are lower than when you first took out your mortgage. If you’re able to move to a smaller interest rate, you could possibly unlock hundreds of dollars each month to apply towards home improvements, increasing your home’s value instead of simply paying it off!

Mortgage refinances may not make sense for everyone, and there are more variables to consider than just current interest rates. Our mortgage loan specialists are happy to advise you on your current mortgage and any options that might be available — you’re also free to use our calculator to help you get an idea of what today’s possibilities are!

Home Improvement Loan

For major additions like a new bedroom or thorough renovations like an energy efficiency overhaul, your savings, available credit or even potential mortgage savings may not cut it. Rather than wait years to save the difference, a home improvement loan allows you to enjoy the new comfort and value now.

Because of the size of the loans, it’s a good idea to source a few estimates from local contractors on the project before approaching a bank with your loan request, as well as investigate any potential tax deductions you can claim should your project increase the energy efficiency of your house. Taking your time here also allows contractors to competitively bid for your project, minimizing the loan size!

Once you’ve assembled your quotes and estimated the increased value to your home, it’s time to chat with a bank about the options available to you. At Carter Bank & Trust, we offer competitive and budget-friendly interest rates that allow you to enjoy your new home in worry-free comfort.

We believe banking should be designed around how it can serve you — not the other way around. Offering innovative and affordable ways to boost the comfort and value of your home is just one of the aspects of people-first banking — so schedule a call or an appointment with your local branch today and let’s dream big.

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