Whether you’re renovating for style or repair, making changes to your home is exciting –and daunting! Planning what to upgrade, where to purchase the supplies, who to trust to do the work are just some of the daunting tasks involved.
But there’s one other detail that needs to be figured out before anything else: how to finance the renovation.
The cost of renovation varies quite a bit, but generally speaking, we’re talking a few thousand.
As in most situations, saving for a big project is ideal, but it’s not always possible. You may be able to crowdsource some of the funding by asking your parents for help or possibly asking friends and family for cash gifts for your wedding or birthday. But it’s unlikely to be enough to finance your home makeover.
For a more sure way to get the money you need to repair or upgrade your home, consider these home loan options.
How To Fund Your Home Renovation
This method is one of the most popular ways to fund many things, including home renovations. Similar to a savings, your home equity is a stash that you can tap into when it makes sense. What’s even better is that refinancing into another loan may also lower your monthly payment or otherwise save you money. There’s also more than one type of refi program. So depending on your credit and other qualifying factors, funding your project with a new home loan may not change your monthly payment at all!
The key here is that it “makes sense” for your loan and financial situation. To see if this is the right choice for you, please contact Tara Mortgage Services.
2. Get a HELOC
If your interest is already low or maybe you’ve already paid off your loan and rather not refi, then consider a HELOC. A Home Equity Line of Credit is a way to access your equity without refinancing. Similar to a credit card, you “borrow” money against your home as needed. Unlike a regular credit card, the interest rates are much lower. One thing to note is that a HELOC is usually an adjustable rate loan. However, fixed-rates HELOC’s are available, too.
Another home loan option that does not require refinancing is a Home Equity Loan. This type of loan requires you to take out the funds all at once, rather than “as needed” in a HELOC. The benefit of this loan is having a lump sum, which may be just what you need for your renovation. You’ll also get the stability of a fixed rate with this type of loan.
Confused as to which loan is best for you? Tara Mortgage Services is here to help! Contact them today for an obligation-free consultation and get on your way to a renovated home at a cost you can afford.
Alex Deacon’s March Real Estate Networking Workshop has been announced, and he’s bringing in two huge guest speakers: Josh Caldwell and Matt Beam! The trio will be discussing Creative Financing Concepts, ideas, laws, etc. Don’t miss out on the most highly anticipated workshop of every year! RSVP below!
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In previous posts, we talked about the current rise in mortgage rates and whether it’s still a good time to buy a home (yes it is!).
This week, we want to focus on refinancing and whether you should consider it in this market. While it may not be the right time to refinance for all homeowners, some situations make it the ideal time to refi. Here are a few scenarios where refinancing your mortgage makes sense even during times of rising rates.
Not sure if you fit these situations? Need personalized answers? Contact Tara Mortgage Services for expert mortgage assistance!
Five Scenarios That Suggest Now Is the Right Time To Refinance
1. Your ARM is due to reset soon
If your adjustable rate mortgage is due to reset within the next year or so, switching loans now could save quite a bit. Whether switching to a fixed-rate mortgage or another ARM, changing your about-to-expire ARM means that your rate is guaranteed for a longer time, despite market fluctuations.
2. You want to consolidate loans
Student loans, medical bills, and credit cards typically have higher interest rates than even the highest mortgage rates. If you are looking save money by consolidating your loans into a lower interest rate mortgage, refinancing can make it happen. You’ll also have the convenience of getting rid of multiple payments. Sometimes the additional cost comes from accidentally missing a payment, resulting in late fees.
3. Your credit improved
If your credit score has increased since you first got your original mortgage, then refinancing could make sense. The best rates and loan programs are often reserved for those with favorable credit scores. So if you weren’t able to qualify for a special home loan program before, you could be eligible now!
Depending on when you first got your loan, there could be new programs now that didn’t exist before. This is often the case in the mortgage industry –new home loan programs are available and eligibility standards adjust as the market and regulations change.
4. Your income has increased
If your income has increased since you last qualified, your debt-to-income ratio has likely also changed. More disposable income with little to no difference in your debt makes you much less of a “credit risk.” And just like the above scenario, you’ll likely qualify for mortgage programs this time around that you didn’t before.
So if you’ve gotten a raise, your spouse has gotten a raise, or if you changed employment where you earn more, then refinancing your current mortgage may be right for you.
5. Your home is located in a “hot market” area
If you live in an area where property values are rising, and you want to use your home equity, then you’ll want to consider a cash-out refinance. Remember that property is an investment and the “earnings” from rising home values is often your best option when you need cash. Use the money to make home improvements, help pay for your children’s college tuition, start up a business, or anything else where a lump sum is needed.
Everyone’s financial situation and goals are different, and truthfully, it may not be in your best interest to refinancing your loan at this time. Contact Tara Mortgage Services today for an honest, fast, and personalized refinancing assessment.
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Making a budget is a lot easier than actually sticking to it–we know. But when you become a homeowner, it’s even more essential that you make an effort to live within your means. Your house is not only your biggest investment, it’s also the place you and your family call home.
One nearly effortless way to live within your means is to make your home more energy effecient and this post will show you how to get started. These ideas will add up to savings little by little but one will add up to BIG savings, fast.
How to Save Money with Energy Efficiency
Energy-efficient upgrades save you money by reducing the energy you use. Consider these simple energy efficient options :
Energy Efficient Appliances: If you bought your home with appliances included or your current appliances are more than 7 years old there’s a good chance your appliances are outdated and may not be as energy-efficient as they could be. When shopping for a new appliance, look for the cost savings estimate. You’ll typically see this tagged right on the appliance. Don’t forget to sell your older appliance and use that money toward the new one! If nothing else, donate it and write it off your taxes.
Get a Programmable Thermostat: This is a relatively low-cost, DIY project. Heating and cooling the home can be a big drain on your budget. By installing a programmable thermostat, you’ll be able to control the heating and cooling, making sure the system only runs when necessary. Savings will likely be immediate and adds up over time.
Change the Light Bulbs: If you have any incandescent bulbs home’s light fixture, you’ll want to change them to energy-efficient fluorescent bulbs. They cost a bit more initially, but they pay for themselves pretty quickly and save you quite a bit over time.
Lower Water Heater Thermostat: Water heaters are typically set at 140 degrees by the manufacturer. However, you may find that find 120 degrees works just as well. Lowering the temperature is also safer for children and can help prevent injury.
Unplug Appliances: When an appliance is plugged in, it uses energy –even when it’s turned off! Save yourself some money and unplug any appliance that isn’t being used or used regularly. That tip requires no investment and starts working right away.
Seal Gaps: Gaps around windows and doors can lead to energy loss by letting your heat and cold air escape. The result is that you run you thermostat longer. Seal those cracks and gaps to have more control over the temperature in your home and use less energy. Weatherproofing sealer readily available at your local hardware store and can be installed in one afternoon!
Refinancing helps you to save money by lowering your mortgage payment or sometimes by adjusting it so that more goes toward the principle. Interest rates change often, plus, there may be loan programs that you qualify now for where you didn’t with your original loan.
If there’s a way to save you money on your mortgage with a refinance, we’ll find it. Remember, your home is your biggest investment. If there’s a way to save money on payments, why not find out?
Here’s another idea: you could refinance to save money AND take out some equity to make those larger, energy efficient upgrades.
Our office is always looking out for you and your money. That’s why we’ve made it easy to apply for your refinance right from your home, office, or anywhere else you might be. Visit Tara Mortgage Services today to fill out our online application, or contact us at our office!
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Zero Money Down is not Impossible
Saturday, Sep 8, 2018, 10:00 AM
Hampton Inn Bridgeville 150 Old Pond Rd Bridgeville, pa
28 Members Attending
I know it sounds too easy to be true and I often preach that if it sounds too good to be true then it probably is. In this case I am confident saying that this can be done regardless if you have been in the business as long as I or if you are new to the business of Real Estate Investing. I am going to show you the step by step process to start your…
Do any of these 7 financial situations sound like you? If they do, then you might be ready to refinance your mortgage!
Top Reasons to Refinance Your Mortgage
1. Your Interest Rate is Higher than Current Mortgage Rates
Interest rates change, and in recent years, have adjusted in your favor! If your mortgage closed more than 5 years ago, the chances are that your rate is higher than current mortgage rates. Refinancing to lower the mortgage interest rate is the top reason that clients contact our office.
2. Looking To Lower Monthly Payment
When you refinance into a new loan, not can you get a lower interest rate but it also adjusts your monthly payments. For example, if your original loan was for 300k with a 30-year term and you’ve paid off 60k since then, your new mortgage will be for only 240k. What’s more, the clock for paying off the loan in 30 years restarts!
3. You Want to Make Home Improvements
A cash-out refi, home equity loan, or HELOC gives you access to the equity of your home. Each of these refinances options are different and one might be better suited for you than the other. Call our office for help deciding which refi is right for you.
4. You’re Nearing Retirement
If you’re approaching retirement age, a refi can lower your monthly payment into one you can afford more comfortably. If you’ve already paid off your loan, consider a reverse mortgage to help supplement your retirement income.
5. You Want a Fixed Rate
An adjustable rate mortgage starts low but eventually changes after a certain number of years, and usually, the rate goes up. Getting into a fixed-rate avoids these drastic changes and locks in a low rate for the life of your loan.
6. You Want to Pay Off Your 30-year Mortgage Sooner
Refinancing your 30-year fixed rate mortgage into a 10-year or 15-year mortgage will help you pay off your home sooner. Interest rates on 15-year loans can be as much as a full percentage point lower than a 30-year loan. This means that more of your payment goes toward the principle plus you also save money on interest!
7. Your Credit Score Has improved Since You Last Closed
Remember that your interest rate is largely dependent on your credit score. If it’s gone up since your closed your loan, that means that you likely qualify for a lower rate today! How low? Apply to find out! Use our free online application and we’ll let you know what rate you qualify for now.
There are many more reasons why people come to see us about refinancing their current loan. Want to find out if refinancing can help you out in your financial situation? Contact Tara Mortgage Services today for a no-obligation refinance consult!
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Alex Deacon Real Estate Networking Workshops
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Learn investing from a local expert with a vast amount of experience in the Pittsburgh market. Alex started investing in 1993. We will review hands on examples, analysis, and …
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Saving for making improvements to your home is often the least expensive route, but it’s not always possible. Thankfully, you have other options for financing! Our business is in home loans, so you might already guess, that’s the option we recommend, but you don’t have to take our word for it.
Read about all your home improvement financing options –from traditional home improvement loans to peer-to-peer loans to cash out refinancing –and decide which is best for you!
Traditional Home Improvement Loans
These loans are financed by banks, credit unions, and a few online lenders. You’ll get a lump sum to pay for all the labor and materials for your home improvements, such as replacing your HVAC system or putting in a new pool.
Though the name implies that it’s a home loan, it’s not –at least not in the typical sense of the term. It doesn’t consider your home equity nor does it require your home as collateral.
A home improvement loan is unsecured so you can expect a higher rate than you would with a secured loan.
Personal Line of Credit
This loan is also an unsecured loan and is collateral-free. You can use the lump sum however you wish. You can upgrade your home and set some money aside for a vacation too. Or maybe pay down some debt. They are funded reasonably fast and don’t require any equity in your home either.
However, a word of caution: the repayment period is usually shorter. This means that your monthly payment will likely be high. If you cannot afford to make high monthly payments, a personal line of credit may not be for you.
These loans are funded by a group of investors rather than a bank or the government (we’ll talk about government loans below). They go by different names, and you may have even received a flyer in the mail from these non-traditional lenders.
On the upside, these loans are also funded quickly, and you can use the money however you want. The downside, however, is that these loans have some of the highest interest rates out there.
Home Equity Loans
Home equity loans and home equity lines of credit (HELOCs) have longer repayment periods with lower interest rates than the above-mentioned loans. That means your monthly payments will be small and more of the payment will go toward the principle.
Another big bonus is that the interest is tax deductible!
The biggest risk to this loan comes with defaulting. If you’re unable to repay the loan, you put your home at risk for foreclosure.
A home equity loan lets you borrow a lump sum, while a HELOC acts more like a line of credit.
With a HELOC, you have a “draw period” during which you can withdraw money. During this time, you only have to repay interest so your initial monthly payments will be quite low. When that draw period ends, your payments will then also include the principle. A HELOC typically has a variable interest rate, so your monthly payment could still be low even after the draw period ends, but it may also increase significantly.
If you prefer a fixed rate, then you’ll want to look at interest rates of a home equity loan or ask about our fixed-rate HELOCs.
A cash-out refinance replaces your current mortgage with a new one, but this time you’ll borrow extra money to finance your home improvements. Borrowing more money means it will take longer to pay off your home, however, your new home loan may have a lower rate than your current one.
This option often requires you to have about 20% equity as well as meeting all the typical requirement of a home loan such as employment and good credit score.
FHA Title I Property Improvement Loans
If your equity isn’t high enough for a cash-out refi, consider an FHA Title I loan. This government-funded loan is for specific home improvements such as energy conservation. They cannot be used for “luxury improvements” such as swimming pools or outdoor patios. This loan caps at $25,000 with a 20-year repayment period. These loans are not widely available, so you’ll want to contact us to see if you qualify.
Want to know precisely how low your payment can be to fund your home improvement? Apply today! Use our digital home loan application and upload your docs securely in between shopping for floor tile and a new kitchen countertop!
RSVP TO ALEX DEACON’S FREE JUNE REAL ESTATE INVESTING WORKSHOP!
Where to spend your construction dollars, staying on budget and on time
Saturday, Jun 9, 2018, 10:00 AM
Hampton Inn Bridgeville 150 Old Pond Rd Bridgeville, pa
18 Members Attending
I get asked at every workshop to do another bus tour. The hurdle of that is finding the time. Plus we can only handle about 20 people per tour to do it right and I end up turning down a dozen or more. I thought that this month we will tour a bunch of my projects and use technology and do it in a nice climate controlled facility. We will tour each r…