Financing a
Home Remodel Project: It's a Matter of Scope
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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