Home Improvement
Home Improvement Financing
Home improvement financing options depending upon the scope and size of the home improvement project. The following are the types of home improvement loans or financing options available:
Second Mortgage. A second mortgage is a loan against the equity in the home. Really, all a second mortgage is basically is an additional mortgage. Typically, most major banks and lending institutions lend up to 80 percent of the appraised value of a home minus the balance on the original mortgage.
Refinancing. Refinancing means you are paying off the old mortgage loans and taking out a new mortgage on the home. To refinance, you generally need to have equity in a home. In addition, a solid credit score (not always necessary), and a steady source of income.
Home Equity Line of Credit. A Home Equity Line of Credit (HELOC) is very similar to a 2nd mortgage. A HELOC allows you to borrow up to 80% of the appraised value of the home. The difference is, the current mortgage balance is subtraced from the appraised value. Also, a HELOC is set up as a line of credit and interest is not charged until there has been money taken against the HELOC.
