Baylake Bank eNews. Member FDIC
Financing a Home Remodel Project: It's a Matter of Scope
Andy Lamack


Andy Lamack
NMLS #495839

There are two basic ways to finance a remodel project and determining which option to consider depends on the size and scope of the project itself.

If the project is smaller in size and does not significantly affect the home's basic layout (example: a kitchen or bath remodel upgrade) we would suggest a home equity loan or refinance of an existing mortgage with the potential of getting cash out for minor upgrades. Of course, this option would require that your home does have equity. In addition, Baylake Bank would help you determine if a mortgage refinance is the best option for your financial situation.

If it is a large remodel project --defined as one that would significantly change the structure of the house and considered a “major rehab”,---it would typically be best to consider a construction loan. Obtaining a construction loan entails having an appraisal done based on the plans and specifications of the project. The appraisal and estimates from the general contractor determine the projected value of the property when the construction is completed. This short-term loan is meant to make the process of construction easy and protect the customer by providing title insured draws that coincide with the completion of major construction project milestones. Payments are interest-only during the construction process and once the home remodel is complete, the loan can be refinanced into permanent loan financing.

For more information about home remodel financing, contact any Mortgage Lender at Baylake Bank. Credit and property guidelines do apply.
 

 

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