It’s safe to assume that practically everyone knows that a mortgage loan is taken in order to pay for a property, such a condominium in the Jersey City area. Most people also know that a student loan is taken to pay for education, and an automobile loan to pay for a vehicle. They all boil down to the fact that someone loans you money, and you agree to pay it back in a certain way, on a certain time schedule, with certain interest.
Suppose you are already paying on a mortgage. Maybe you have one of the gorgeous units at 15 Warren Street. Say you’ve lived there a number of years and have decided the place needs to be redecorated from top to bottom. What are some ways to pay for your HGTV overhaul?
One way is to use your credit card for everything. That could run into some very high interest rates, however. Another possibility is to refinance your mortgage, and borrow more than you owe, a “cash-out refinance” type loan. This could work well, if the going interest rate is less than it was when you first signed for the loan. One problem that can come up is that it’s sometimes difficult to know exactly how much you’ll need to borrow.
A conventional bank loan is another option. The funds can be used for the project, and the payments would be on a regular basis, just as with a mortgage loan. It, too, would be a guessing game as to how much money you may need.
Another popular option of those looking to fund a remodeling project is to opt for a “line of credit” on the equity in your home instead of an outright loan of a certain amount. This is a flexible way to obtain funds. It works almost like a credit card, because you get the amount you need when you need it. In many instances, the interest rate will be lower than what you’ll find using most credit cards.
As long as you make your payments are on time, your rates can remain low.
Businesses have been using the line of credit way of obtaining funds for many years. Recently, it has become a popular way of borrowing for the private sector as well.
Speak to your accountant, financial planner, private banker, or mortgage representative to explore which options may be right for you.
If you were to remodel something in your home, what would it be?
Edward