The bank will appraise your home based on plans and specifications that SawHorse will prepare for you, and give you a new loan to cover the amount of the renovation. This type of loan may be available as a new first mortgage or as a second mortgage.
You may need to borrow some or all of the money needed for your renovation project. Depending on the value of your home and the terms of your current mortgage, you have several options to consider:
Using The Equity You Have: Ifthe difference between the current value of your home and the balance
remaining on your mortgage is enough to pay for your project, you may
be able to obtain a home equity credit line or a second mortgage. These
loans will provide you with the money you need to pay for your project.
Many banks offer these loans with no closing costs. You may also
consider refinancing the entire house. You can then take the extra
money available from the new loan to pay for your renovation.
When You Don't Have Enough Equity:
If the current value of your house is not high enough to cover the
costs of the renovation, then you may be able to obtain a loan for the
renovation based on the value of your house after the work is complete. If
you chose to take out a new first mortgage home improvement loan (a
refinance), the bank will pay off your existing mortgage and distribute
the money for the renovation during the project. You will then have one
new loan for your home. If you get a second mortgage, your existing
loan will remain, and you will have two payments to different lenders
at the end of the project.
Which Loan Is Best? This depends on the interest rate and term of your existing mortgage. If you current loan has a high interest rate, then refinancing may be appropriate. You should consider how much the closing costs will be, the new interest rate, and the term of the loan. If your current loan has a low interest rate you may be better off taking out a second mortgage and keeping your existing 1st mortgage.
If You Need Assistance: To determine the best type of loan for you, consider asking your banker for advice. You will find that banks specialize in different types of loans, and not every bank will be able to provide you with the right loan for your particular situation. You may need to talk to several lenders before you find the one that is right for you.
When you meet with a representative from SawHorse, Inc. to discuss your renovations,we can review the different financing options to help you determine what is right for you. Listed below are lenders who offer renovation financing. We have worked with them on many occasions, and have found them to be excellent resources.
Private Bank of Buckhead