SIOUX FALLS, SD, Dec 06, 2013—If you're currently looking to remodel your home but aren't sure how to finance it, you're in luck. There are many ways to finance a remodeling project, explains Douglas Nelson, Broker/Owner of HJN Team Real Estate. If you have equity in your home, a good credit rating, and steady income, you can refinance your mortgage and borrow a percentage of the equity to cover remodeling costs.
“Refinancing is a good option if you can get a mortgage interest rate at least two percentage points below your current home loan rate,” says Nelson.
Other options include a second mortgage, a home equity loan, or an unsecured loan. Less popular options: margin loans, which are taken against securities you own; and loans from retirement plans, life insurance policies and credit cards.
Remember that if you're hiring contractors for work, you need to be able to pay them. “If for any reason you can't, they can take out a mechanic's lien – a “hold” against your property that provides contractors and suppliers legal recourse to assure payment for services,” notes Nelson.
The liens vary from state to state and allow for a cloud on the title of your property and foreclosure action. Also, if you paid the contractor, but he failed to pay the subcontractors and laborers – who do not have a contract with you – then the workers may file a mechanic's lien on your home.
“This could result in a double payment by you for the same job,” explains Nelson. “You can protect yourself from unwarranted liens by selecting your contractor carefully and managing your construction project responsibly.
“Also, most construction lenders will specify a payment distribution process that involves the securing of lien waivers,” Nelson continues. The remodeling contract should address this as well, assuring that the general contractor is responsible for all payments as well as any costs required to remedy lien disputes that may arise.
For more information on refinancing, please contact HJN Team Real Estate at Doug@HJNTeam.com, 605-339-4456, or HJN Team Real Estate.
HJN Team Real Estate was established in 1973 on the foundations of training, technology, team effort, and most of all, trust. Our success over the years has proven that adhering to these foundations ensures long term success for our clients. Our passion is not selling homes, it is helping out clients achieve their dreams. HJN Team Real Estate continues to work as a team to provide the best customer service from the start to the finish of a real estate transaction. Whether residential or commercial, HJN Team Real Estate has the REALTOR to meet your needs.