home equity

6 tips for the best home remodeling project

Consider your financing options
Consider your financing options | jsmith/Getty Images

Consider your financing options

Whether you're looking to customize your home to your own tastes or purchase a fixer for resale, you'll benefit by exploring the best way to finance your upgrades.

Brendan Coughlin, executive vice president of consumer lending for Citizens Bank, says a home equity line of credit (or HELOC) makes the most sense for homeowners set on improvements.

If you're looking for a home equity loan or line of credit, check out the rates at Bankrate.com first.

"When you can borrow at a rate of 3 percent to 3.5 percent, that's a pretty inexpensive access to credit, especially if you're going to reinvest that and add value to your home," he says.

In addition to their typical 10-year draw period, during which homeowners can pay interest only, consumers are free to use a HELOC to consolidate credit card debt or pay for college.

If you're thinking of buying a fixer, the Federal Housing Administration's 203(k) Rehabilitation Mortgage Insurance and Fannie Mae's HomeStyle Renovation Mortgage program can build renovation funds into your home purchase.

"A handful of programs require as little as 5 percent down," Coughlin says. "It can be smart to keep that extra money aside for your home improvement."

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Ask Dr. Don

HELOC vs. reverse mortgage?

Dear Senior Living Adviser, If you have a home equity line of credit , or HELOC, for $150,000 with no balance on it, should you use it instead of a reverse mortgage? Which is a better way to save the assets if there is... Read more


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