The most sensible way to finance your home improvement project is with cash-in-pocket. However, since most people do not have enough cash on hand to finance a nice renovation, homeowners look to their home equity for home improvement funds for two reasons: because it is available, and because it will raise the value of the property. The three ways to access your home equity are through a fixed-rate home equity loan, an adjustable-rate home equity line of credit (HELOC), or a mortgage refinance. Also referred to as a second mortgage, a home equity loan is generally used when you know the exact cost of the remodel, and you want no surprises in your financing. A HELOC functions much like a credit card. The bank will offer a line of credit, and you can withdraw as much money as you would like. However, the rate fluctuates, so it is difficult to predict how much interest you will be charged month-to-month. Cash-out refinancing involves refinancing your mortgage, and taking cash out of the overall equity in your home. This process mirrors your application for your first mortgage, expect with less paperwork because you already own the home. The Joint Center for Housing Studies is anticipating several fruitful years ahead for contractors, so if you have been thinking about a renovation, the time may be right to examine financing options. | Read More