Home renovations/remodeling can be a small upgrade or a major project. In any case, it’ going to cost money; which means you need to plan what you want done, who’s going to do it, and where the money’s coming from.
The first thing is to calculate how much equity you have in your home to cover the cost of your renovation. Add the balance of your mortgage(s) and subtract the total from the value of your home; to get an approximate value of your equity. If you don’t know your home’s value, use the tax assessed value from the county auditor’s website.
Determine how much you want to borrow and calculate what your loan value would be. Add the new loan amount to any mortgages you have and divide the total into your property value. That gives you your loan to value percentage for your new loan, which could affect the interest rate you pay.
Contact at least three lenders to compare rates and terms offered for equity loans. If you have a lender you’ve used before, they may waive fees or offer better rates. Have your loan value and the amount of your available equity ready, as they affect the terms of your loan.
Once you’ve chosen a lender, discuss the equity programs available. Go over the interest calculations and various fees thoroughly. If you choose a revolving line of credit, make sure you understand the terms and what happens when the “draw period” ends..
You can reduce the amount of fees you pay by asking the bank to waive the appraisal requirement and use the tax assessment as your property value. Lenders generally will agree if you have a lot of equity.
Keep your contractor informed so they can start as soon as you’ve secured the financing.