Real People, Real Issues - Help With Home Improvement
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Reported by: Jason Frazer
Wednesday, Nov 12, 2008 @04:44pm EST
These days, you hear a lot about how hard it is to sell your home. With the markets going south and the economic slowdown, many mortgage brokers will agree that it's a buyers market.
But if you're not in a position to buy another home or maybe you are having trouble selling your home, a home improvement to the bathroom or other part of your home might increase the value of it, therefore helping you sell your home.
There are several ways you can fund the improvements if you don't have all of the money to do the improvement. First is with a Home Equity Loan. Most credit unions and large commercial banks offer them. There are pros and cons to going with the home equity loan. First a home equity loan just like a home equity line means you are borrowing against the value of your home. With these loans, you get a fixed rate and term for the loan and a check for the full amount. The downside is if you need additional money for that extra faucet or gold plated door knob, you won't have access to additional money.
The second option is a home equity line of credit. Think credit card but for your home. Basically the bank approves you for a line of credit which you can withdraw parts, half or almost the full amount of the equity in your home. The benefit to a home equity line is easy, versatility. Depending on your bank and credit history, they will approve you for up to 95% of the available equity in your home. If you only take out 5% of the equity, you will only be paying interest on only that 5% you withdrew even though you may have additional equity available. The downside however to a home equity line is depending on when you withdraw the equity, the interest rate you initially received is subject to change. That means the rate it initially cost you to take out money when you applied might be different than the rate it cost to withdraw money a year later.
If you don't have stellar credit and still want to do a home improvement, there are options available for you as well. The easiest way is with credit cards. The interest rate will be significantly more, up to three or four times what a home equity rate would be.
One great resource to compare local bank rates is bankrate.com. There you can compare information on bank rates for a home equity line or loan.
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