Using Home Equity to Renovate & Remodel Your Home
Homeowners who have paid down their mortgages significantly may be well-positioned to tackle home renovation and remodeling projects by tapping into their available home equity. When your home is worth more than what you owe on it, you may be able to use that equity to fund remodeling or renovation projects for your DC home. By using your home’s equity to fund your home improvement projects, you’ll be well on your way to creating the house of your dreams!
How Can Home Equity be Used to Fund Home Renovations?
As your home’s value increases, that value can be loaned out, so you can use your home’s equity to fund home renovation projects. These loans are given based on your home’s value and are structured like a traditional mortgage. Repayment periods are highly structured and begin immediately, making it easy for MD and VA homeowners to budget their projects accordingly. Home equity loans also typically feature fixed rates, including principal and interest, meaning you’ll pay the same amount each month to pay off the loan.
A home equity loan is similar to taking out a second mortgage, and it can be paid back over terms of 10, 15, 20, or 30 years. Most lenders will not loan out more than 80% or 85% of your home’s equity, so it’s important to keep this in mind — especially if you plan to tackle more involved home renovation projects. Because home equity loans are secured loans against your house, failure to make payments could result in the bank taking possession of your home. Additionally, if your home’s value plummets, you may end up owing more on the loan than your home is actually worth.
Benefits of Using Home Equity for Your DC Home Renovation
When done correctly, using your home’s equity to fund home improvements can be incredibly beneficial. The following are just some of the key benefits of choosing a home equity loan to cover the cost of your home remodeling or renovation projects:
- Low Interest: Home equity loan interest rates are typically much lower than alternative loan options.
- Tax Breaks: The interest you pay on the loan is often tax-deductible, so long as it’s used to remodel or repair your home.
- Money Moves: If your DC home remodeling project will take place in stages, you can borrow the full amount now and move some of it into an interest-bearing account so you can make a bit of money back before the final invoice arrives.
It’s important for DC homeowners to select home improvement projects that are proven to increase their home’s value and provide a strong return on their investment. Projects that are designed to dramatically increase your home’s value are beneficial to both you and your lender.
Worthwhile Home Remodeling Projects for a Stronger ROI
When planning your home remodeling project using a home equity loan, it’s important to ensure the highest return on your investment so you can recoup the costs of your projects. The following are some of the most strategic home remodeling projects that can provide homeowners with a stronger return on their initial investment:
- Garage Door Replacement
- Lighting Updates
- Carpet Replacement
- Fresh Paint
- Home Additions
- Kitchen Renovation
No matter what your home remodeling project entails, Wentworth has the professional team available to get the job done right. From kitchen renovations to home additions and everything in between, our team will ensure your home equity is put to good use as we deliver the exceptional home improvements you desire to increase your home’s value.
Contact our team to get started with your next home remodeling or renovation project today!