Many families who live on a tight budget may have to hold off on remodels or upgrades. A few years after taking out a loan, you may find it necessary to make some home renovations as your family grows. If you think it’s time to make home improvements to give your family a comfortable living, refinancing could be your best option!
Refinancing may benefit millions of cash-strapped families
Refinancing, or the process of improving your existing loan by replacing it with a much favorable one, at this time is expected to benefit over 8 million homeowners as mortgage interest rates reportedly hit 3.73%. According to Black Knight, a real estate software and analytics provider, approximately 8.2 million mortgage borrowers may reduce their interest rates by at least 75 basis points through refinancing. If you have a 30-year fixed mortgage and you don’t have any relocation plans for the next couple of years, this could be the best time to consider refinancing. Black Knight further says that if you’ve become cash-strapped a few years after making a 20% down payment, cash-out refinancing may allow you to use an average of $136,000 worth of your home’s equity.
Homeowners who have considered refinancing after taking out a loan last year have increased by 300% as they probably know the process will benefit them.
Other cash-out refinancing advantages that homeowners should know
If you are a homeowner who wishes to remodel, you should consider cash-out refinancing because you can access a significantly large amount of home equity with low-interest rates. It also allows you to shorten your repayment term, so you can settle your loan faster. Moreover, making “substantial home improvements” using cash-out refinances may reduce your loan through tax breaks.
As a reminder, when you consider refinancing, it’s important to keep in mind that you’ll need to settle all the closing costs and you need to diligently repay your loan on time.
Knowing if you’re qualified for cash-out refinancing is easy
If you have worked enough to improve your credit score and you’re confident that you’re capable of repaying your monthly dues on time but you’re too busy to speak with a loan advisor, there’s a fast and easy way to determine if you’re qualified to refinance.
Important tips you need to know when hiring a home remodeling contractor
So, you already have the remodeling funds you need, and you’re now excited to begin your project. Whether you’re adding a new bedroom, expanding your living room, or updating your baths, it’s important that you hire certified contractors who are qualified to do the job. The Federal Trade Commission offers tips when hiring a contractor.
As you narrow down your contractor choices, make sure to ask around and try to get additional information about the contractors you consider. One great way of knowing a contractor is by checking consumer reviews and ratings on their websites or Facebook pages. Ask for certifications and state licenses to determine if a contractor is qualified to do a project. Ideally, contractors should have appropriate insurances like personal liability, property damage coverage, and workers’ compensation.