Home renovations usually can increase the resale value of your home. However, there’s no doubt they’re often a significant investment. Fortunately, homeowners have access to a wide range of financing options for their whole home remodel and general remodeling projects.
Here are the pros and cons of some of these financing options:
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Home Renovation Loans
Home renovation loans are a relatively new financing option that’s become more increasingly attractive to homeowners, thanks to historically low interest rates. Since this option doesn’t require homeowners to refinance their entire mortgage, they can keep enjoying their low interest rates. Home renovation loans also have smaller closing costs because they’re calculated using a smaller base. And, compared to a 30-year fixed first position mortgage, home renovation loans generally have lower fixed interest rates, which can be paid in 10- or 15-year terms.
Single-Close Construction To Permanent Loan (CTP)
CTP loans function as refinancing in a certain sense because they replace your current first mortgage. Payments for CTP loans are spread over 30 years, so monthly payments are some of the lowest on the market. Keep in mind that while you can usually get the best traditional mortgage rates you can get with a CTP loan, you might be refinancing into higher rates. As such, it’s best to compare interest rates before making a decision.
Fannie Mae HomeStyle Loan
A Fannie Mae homestyle loan is similar to a single-close CTP loan. The only difference is that the former is insured by Fannie Mae, a government-sponsored agency, while the latter is offered by private banks. This option is more suited to homeowners who have less-than-stellar credit since the requirements for a Fannie Mae homestyle loan aren’t as stringent as those required by a bank loan. However, Fannie Mae homestyle loans usually have higher rates.
Having trouble choosing a financing option for your home or kitchen remodel? You can consult your local remodeler about your financing options.
Looking for remodelers in your area?
Fort Bend Builders offers professional design-build and remodeling services. To get started on your next remodeling project, call us at (713) 714-1343, or fill out this form. We serve homeowners in Katy, TX, as well as the surrounding communities.
