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Home Improvement Refinance

In a real estate market where demand exceeds supply, many homeowners contemplate renovations or remodels of their existing homes instead of moving. Undertaking even a modest remodel can significantly boost your home’s value. 

Spire Financial offers a variety of home improvement refinance options suitable for any homeowner seeking to enhance their investment. Our team of loan officers is prepared to assist you in beginning this process.

Deciding to Renovate or Remodel

One of the main components of a home improvement refinance involves deciding which option to pursue. An easy way to differentiate the two is by the degree of construction. If you are renovating a kitchen, the kitchen remains a kitchen, but with repairs and updates. This can include new flooring, new cabinets, or replacing rotted wood in the structure and typically does not require a large sum of money. A HELOC is often the preferred method in this scenario. On the other hand, remodeling changes the functionality and design of an area, such as expanding a bathroom or reconfiguring a kitchen layout, and is typically much more expensive. The more you borrow, the more likely a cash out refinance of your first loan might be the better solution because first loans typically have lower rates. More on this below in the “which option is better for my situation” section.

Cash Out Refinance for Home Improvement

Spire Financial offers cash out refinance options to pay off an existing mortgage and capitalize on your home equity. More importantly, cash out refinance can be used to help finance your home improvement project, increasing the total value of your home. Modernize your kitchen or bathroom to match current housing trends and increase the curb appeal of your home. It’s a cost that inherently increases the longevity of your investment.

How a Home Equity Line of Credit (HELOC) Works

HELOCs are an alternative option to refinancing your current loan. Unlike the refinance that replaces your current loan, a HELOC is typically added as a second loan on your home. The biggest benefits are it enables homeowners to borrow from their current home equity without losing their favorable terms on their first mortgage. They typically work like a credit card attached to your home, but with much better rates. HELOCs also allow you to borrow funds as you need them, so you’re not stuck paying for the whole line if you’re only using some of it.

Which Option is Best for My Situation?

Deciding between a cash out refinance and a HELOC comes down to a few things. First, if your terms on your current first loan are favorable (low interest rate, no mortgage insurance, etc) and a refinance cannot match or improve your terms, a HELOC might make more sense. But because HELOC rates are typically higher than regular first loan rates, it can be hard to know straight away what option is better. This is where putting the two options together in a side-by-side comparison is important and will typically make it very clear which option is the best for you. An experienced loan originator can help put this together for you and will be able to elaborate on the pros and cons of each as well. Spire can help! Contact us today.

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