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Refinancing Your Home for Renovations

Home renovations and general upkeep are an important part of home ownership. Whether that comes in the form of necessary fixes like a leaky roof, an expansion to accommodate your growing family, or a redesign for a fresh new look, home renovations are a smart way to keep your home beautiful and safe. They also increase your house’s market value, which is important whether or not you are planning on selling anytime soon. Of course, grand makeovers like you might see on HGTV can seem out of reach when you have to budget for your monthly mortgage payments. That is why many homeowners opt to refinance to pay for their home renovations. There are pros and cons to deciding to refinance. It’s always a good idea to consult with a mortgage expert before making any decisions regarding your payment situation. At Mortgage West - The Mortgage Centre, we want you to make the best choices for you and your family. Here are some things to consider if you want to refinance your home for a renovation:

Pros of Refinancing

The most obvious advantage of refinancing, for any reason, is to get more money in your pocket right now. If your home renovation project is particularly urgent, this can be a very good reason to choose to refinance. You can either refinance for a lower interest rate, a longer amortization (lower monthly payments), or borrow money directly against your home equity. This can free up cash so that you can plan your renovations without much change to your monthly budget. Something to consider is having a fixed budget on the renovation itself. A recent poll conducted by CIBC showed that nearly two thirds of people who begin home renovation projects have no clear budget in mind. If you are looking into refinancing, determine exactly how much you need so that you can find the best mortgage and rate for your situation.

Some Downsides

Depending on how your situation has changed since you signed for your house, it may be hard to get a similar or better rate going into your refinancing. Lenders can be especially wary of potential clients who have renovation projects currently underway, so you might want to wait to begin the work until the mortgage and paperwork is settled. Taking out a new loan can also bring new costs; even if your monthly payment will be lower, there are fees and taxes associated with any new mortgage, and you might incur a penalty for closing your previous mortgage early. Always look at the annual percentage rate (APR) before deciding on any refinancing plans. The best way to make sure you get exactly what you want without any hidden fees is to work with a mortgage broker.

To find out more about whether refinancing for your home renovation best suits your financial needs, contact Rose Blankenagel at Mortgage West - The Mortgage Centre today