Many homeowners eventually are faced with a decision between buying a new home or remodeling a current one.
The pros and cons of each are quite
obvious. Buying a new home is exciting. You get to live in a
new space and start a "new" life.
But the cost is tremendous. By
remodeling your current home, you can give it a fresh new look, even
though it's still the same house.
The cost is infinitely more manageable.
Taking out a Home Improvement Loan
Although home remodeling is usually much
cheaper than purchasing a new home, many people still need to take out a
home remodel loan in order to finance their projects.
Even simple things like cabinet refacing
or building a new porch often end up costing much more than
anticipated. Without ready capital, it is usually necessary to
either take out a second mortgage or secure a home improvement loan.
Finding Collateral for a Home Remodel Loan
Although some home improvement loan
types can be secured through personal assets, stocks, and things of that
nature, many homeowners use their existing property as collateral.
This is why a home remodel loan is
sometimes referred to as a second mortgage or home equity loan. An
individual basically borrows capital against the underlying value of
her property.
The payoff, however, is potentially
quite high. Besides the personal enjoyment one derives from living
in a remodeled home, it also ends up increasing the overall property
value.
Retiling floors, adding a pool, or
installing newer pipes or fixtures can help homeowners fetch a higher
asking price when it comes time to sell later down the road.