This week, Javier Ruiz from New American Funding joins Aaron and Tracy to discuss all you need to know about financing a home remodel. We talk about cost estimation, how to decide the best financing options for you and which rooms will hit your budget the hardest.
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FAST Facts: 1. According to HomeAdvisor, the average kitchen remodel in the US ranges from $12,000 - $30,000 or around $150 per sq. ft 2. To hire a handyman the average cost is $390 ph 3. The average cost of a bathroom remodeling project is approximately $10,000, although this includes minor, partial, and small bathroom remodeling costs. A comprehensive bathroom remodel is likely to cost $15,000 or more; a large master bath remodel can easily go over $50,000. 4. Most people planning a house upgrade aren’t doing it in order to put a “For Sale” sign in the yard. In fact, only seven percent of homeowners are renovating to prepare their homes to be sold, the lowest percentage since 2015. (marketwatch) 5. The majority of homeowners (62 percent) plan to pay for projects, at least in part, by using savings. Other home improvement financing options include credit cards, 30 percent of homeowners say they’ll pay for a project using plastic. While credit cards are also a popular option for millennial homeowners, it is significantly less so than last year, down 16 percent. 6. Payment example: Monthly payments for a $25,000 loan at 7.99% APR with a term of 12 years would result in 144 monthly payments of $270.48. (lightstream) 7. A landscaping project can cost anywhere from $5,000 to over $100,000. When deciding on a budget keep in mind that investing in professional landscaping will greatly add to the value of your home. A general rule of thumb is to spend 10% of your home's value on landscaping.
JAVIERS’S TIPS: - Find out what the value of your home is currently, and what you owe, to get a good idea of what you can get financially. - Cash out refinance option can be a little pricier. - Refinancing is getting a new loan that pays off your existing loan. - Pro of refinancing is the liberty to spend the money the way you want. - A drawback is rising interest rates. - There’s a Fannie Mae financing option called Home Style- it’s a renovation loan that allows you to use the maximum value of your home to purchase and/or renovate a home. https://www.fanniemae.com/singlefamily/homestyle-renovation - Pros: You’re increasing the value of the loan. You can add luxury items. - Home equity line of credit is another option. The rate is a bit higher but gives you the flexibility to access equity in your home. - Good for a small project where you can pay it off quickly. - Your most affordable rate will be through a bank or mortgage company vs. a credit card or in-secure line of credit. - Find a trusted loan officer who’s experienced in home loans. - The bank isn’t necessarily the best place to start. Googling “construction loans” or “renovation financing” is a great place to start. - Credit cards have very high interest rates. - If a loan is going to create financial stress, consider splitting your remodel into smaller projects.
