Refinancing for Home Improvement

You are a homeowner. You have almost everything you need except you might want to improve your home just a tad bit more. If you are considering home improvement, refinancing is a good choice.

In a typical refinance transaction, you'll start the process by applying for a second loan or first mortgage to cover the improvement costs. Home equity loans and lines of credit are viable options that you can go with in order to get some extra money into your home. Everyone wants to get a better return from their real estate investment when they sell it. You can achieve this by refinancing and doing some upgrades or improvement. Moreover, it can give you more comfort in the home, improve your credit from the new loan, and possibly additional monthly income if you were to add another bedroom and occasionally rent it out.

When deciding to refinance your home, you need to consider several factors initially. The first thing to realize is that you are not taking your home out of the market. If home values in your area are higher than your home present worth, then upgrading is a wise choice. If your home is already at the high end, then refinancing and putting in more improvements may not yield the substantial appreciation you desire. So, you should research this information and make sure it is to your advantage.

Secondly, if you are refinancing your home loan in order to consolidate debts or improve your credit; make sure that your existing finances such as income are stable enough to allow you to pay off the new mortgage loan. Since late 2005, lenders have tightened their credit lending standards which makes home financing a little more difficult to secure. Those no income verification and no doc loans are not so abundantly available anymore. However, if you are diligent enough you can find some lenders and brokers who still offer it in these times. What's required nowadays for no income loans is typically a larger down payment from five to ten percent for purchases and the same equity percentages when refinancing plus verified liquid assets in case of emergency.