The question is: How do you plan to finance it? With home prices recovering, many homeowners are tapping their home’s equity to pay for projects.
But is that always a good idea?
I found an interesting, and relevant, article on CNN Money called “5 things to consider before tapping your home for cash.” It provides some useful information and food for thought.
I know you’re busy, so I put together some of the key points from the article:
1. If you locked in an ultra-low rate in the past few years, a home equity loan could save you more money than refinancing.
2. The price you’ll pay up front to get a home equity loan is far cheaper than refinancing.
3. Refinancing your home starts your payment schedule over again (15 year, 30 year loan, etc.) whereas a home equity loan has it's own payment schedule leaving your current mortgage alone.
4. Using a home equity loan to increase the value of your home or increase your business value through further education can be smart. Using it to purchase a new car or go on vacation can be foolish.
5. Home equity loans are often adjustable, meaning there is a risk your payments will rise.
6. There can be tax benefits with a home equity loan (just as with your primary mortgage).
If you want some of the finer details from the article, you can read the whole thing here.
The article does a great job of weighing the pros and cons of borrowing against your home to finance home renovations.
If you are still on the fence about this form of financing, you can always give me a call. I’ve been in the business a long time, and I would love to go over your options with you.
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