Solera Home Improvement provides home remodeling services in the greater metro area of San Jose, CA
Home Remodeling – San Jose – Process – Loan Options
How much of a remodeling loan you can get, depends on a number of factors:
Your credit rating: The higher your credit score, the better your terms will be.
Your loan to value ratio: When you have more equity in your home, you can borrow more.
Your income: Income verification loans are back (good thing too) so higher income allows for larger loans.
Interest rates: You obviously want the lowest rate available.
Loan term: If you want to pay over a longer time, you may be able to borrow more.
Points: Paying more up front and not financing points allows you to borrow more.
What are your options?
All of your options are mortgages of one sort or another, but they are called by different names.
Refinance your mortgage
Home equity loan: This is basically a second mortgage but these are often cheaper than refinancing.
Home equity line of credit: This is a line of credit against the equity in your home.
FHA 203(k) mortgages: This refinances the first mortgage and rolls in the home remodeling costs, and the home value is the value of the home after the remodeling proejct is complete.
Energy efficient mortgages (EEMs): The concept here is if your home is very energy efficient, you pay less for energy and can divert that money to your loan repayment. This can boost your debt-to-income ratio by 2 points.
Yourself: Do you have assets (stocks, bonds, CDs, savings) you expect to appreciate slower than your home (over time I mean)? There is no mortgage interest deduction here, so take that into account when doing your calculations.
Disclaimer: We do not offer home remodeling financing. We are not a mortgage broker, bank, credit, union, of any kind. This information is presented in hopes it provides a useful check to you.