Financing Options

Using the Equity Value in Your Home

is one of the best financing option for home improvement and remodeling. A Home Equity Line of Credit (or home refinancing) allows you finance home improvement and other family needs at minimum cost.

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financing options

How Best to Finance Home Improvement

Type Home Remodeling Financing

The equity value in your home is one of the best financing option for home remodeling and home improvement.

  • You can either apply for a home equity line of credit (HELOC) or fixed-rate home equity loan;
  • or you can refinance your home with a cash-out option:

 

There are two types of home equity financing:

  1. Home Equity Line of Credit:
    this is an open-ended line of credit where you can withdrawal funds from your credit line as often as you like up to the full amount of your equity line credit balance.

    Rates are variable and our subject to change. The draw period can range from 5 years to 15 years, depending on your need and lender.
  2. Home Equity Fixed-Rate Loan
    this is an one-time loan advance based on the equity value of your home. You will then repay this loan amount over a period of time (from 10-15 years) using a loan amortization schedule.

    Rates are fixed. You cannot make any new loan advances.

 

Our recommended option is a Home Equity Line of Credit for use with home remodeling and home improvement

Apply for an equity line of credit with a 5-10 year draw period — use the line to pay contractors and home remodeling supplies.

You simply advance yourself funds whenever you need to fund contractors, supplies, or make an home improvement purchase.

 

With your home equity line, you can:

    • expand your kitchen
    • upgrade your bathroom
    • landscape your yard
    • build a room in your attic
    • extend your storage area
    • put in a swimming pool
    • redecorate the family room

    And while you're at it:

    • consolidate your bills
    • send your child to college
    • make a trip abroad
    • you decide: _______________

 

Your equity line of credit is the right choice for your home renovation and home improvement needs.

It comes with the tools to manage your project with the least cost and maximum return. Simply advance yourself funds as needed.

You will pay interest only on the amount you borrow, which interest cost may be deducted from your taxes if you qualify.

Consult your tax advisor to see if you qualify.

 

Most home equity line of credit rates are indexed to the Prime interest rate

When the prime interest rate goes up, so does your home equity line of credit rate.

For example:

Many lenders will index their home equity rates to the Prime Interest rate. They will then add a margin to the prime rate to give you the overall interest rate; i.e, in other words, the price to use your equity line.

The margin will vary, depending on your LTV value, your credit score, and other qualifying factors. If you have excellant credit and high LTV values, your margin can range from -0.5% to 0.25% over Prime.

 

You can use your home equity line whenever you need.

It's like becoming your own banker. Simply advance the funds you need ... when you need ... as you need.

search your home equity among multiple lenders for best option - see list
request a rate quote and terms from up to four lenders
  or dial toll-free: 1-877-777-1370

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financing options

You Can Refinance Your Home

You may consider home refinancing as a funding option

especially if you need to lock-in a better rate and/or reduce your payoff terms. You simply refinance your mortgage and request a cash-out position that pays for your home improvement.

For example:

Let's say your current mortgage loan balance is $200,000; and the investment you need for your home improvement is $20,000.

You will refinance your mortgage loans at a better rate and term at a new mortgage loan balance of $220,000. The $20,000 will be given you as a "cash-out" that can be used to pay for home improvement.

Make sure that you run the numbers. The total costs to refinance may not benefit.

  • use this refinancing breakdown calculator to run the numbers:
    click here

 

Reasons why you might consider refinancing

1: To Get a Better Rate:

The key reason why home owners refinance their mortgage is to lower their current rate. Your new rate should be 1-2 points lower than your current rate in order to break-even on home refinancing costs.

Also, the length you plan to stay in your home after you refinance should be an additional 5-7 years in order to benefit. If you sell your home before then, you may not break even considering the costs to refinance.

Refinancing costs include:

  • orgination fees,
  • closing costs,
  • appraisal fees,
  • title and registration fees,
  • and other lender fees.

Some of these costs may be waived or reduced depending on your application and lender. Be sure to shop your refi application. Pay particular attention to quoted refi and closing costs.

 

2: To Get Better Repayment Terms:

Some homeowners will refinance to lower their repayment terms from 30-year to 15-year or lower. These homeowners may have a change in their financial position where they can afford a bigger mortgage payment.

Example:

Mortgage rates on 15-year mortgages are generally lower than 30-year mortgages. The monthly payment will increase, but the homeowner will be able to payoff their mortgage quicker and save thousands in interest.

  15-Year 30-Year
Mortgage Amount: $100,000 $100,000
Interest Rate (APR): 7.50% 8.00%
Monthly Payment: $927.01 $733.76
Number of Payments: 180 360
Total Money Spent: $166,862 $246,149
Total Interest Paid: $66,862 $164,149

 

3: To Get Cash Out:

Many homeowners will refinance to get cash out for home improvement and other financing needs.

Cash-out refinancing simple means you take the equity value in your home and refinance your mortgage up to 80% or lower based on the equity value of your home.

The cash difference is then given to the homeowner to be used for any purpose they want.

Example of cash out amounts:

  • If the home mortgage to be refinanced is at $100,000, and the home value is estimated to be $200,000, the homeowner can cash-out up to 80%LTV minus the refinanced amount.
  • $160,000 ($200,000 X 80%)
    minus refi amount ($100,000)
    =
    $60,000 is available for cash

If the 80%LTV rule doesn't give you enough cash, you can refinanced at 90%LTV and in some cases, 95%LTV.

But understand that your total equity value in your home is below the 20% required for home mortgage loans. You will then need to apply for Private Mortgage Insurance (PMI) in order to get cash-out greater than 80%LTV.

The monthly cost for PMI may defeat your refinancing benefit.

 

4: To Get Into a More Stable Product

Many homeowners are refinancing to get into a more stable, fixed rate mortgage loan.

Homeowners with payment-risk mortgages such as adjustables, interest-only, minimum payments, and other high-risk mortgages will refinance into more stable, fixed-rate mortgage loan.

search your home equity among multiple lenders for best option - see list
request a rate quote and terms from up to four lenders
  or dial toll-free: 1-877-777-1370

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financing options

The Bank Equity Program

How Best to Finance Your Needs

You can become a banker by using the equity value of your home to finance family needs and manage your money.

Use it to pay contractors, buy supplies, make home improvements, payoff debts, paydown your mortgage, finance college, manage money and more.

 

There is Nothing to Invest

You simply process your banking through your home using a simple technique:

  • Deposit all of your income into your banker home equity line of credit account
  • You will take all of your income sources and deposit them into your equity line account instead of your checking account.
  • Now use your banker home equity account to pay family expenses
  • Use your banker home equity account to pay for everyday budgeted and planned expenses
  • Your discretionary income pay offs your financing costs FAST!
  • Your discretionary income (the income amount minus your expenses) remains into your banker home equity line account to lower the home improvement debt balance.
  • Over time, you will be able to pay off your financing debts in half the time by budgeting and managing your banker home equity line.

 

You can also use your banker account to finance other needs

such personal debt, a new car, college and other.

jump over to our banker line of credit for a quick demonstration
view banker line of credit

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financing options

Account Management Suggestions

click here to print the comparison sheet to shop lenders

Suggestions on how to access your home equity line of credit for maximum benefit:

  1. Start with an approved bank line of credit account from a lending institution.
  2. Apply for or use a rebate award credit card exclusively assigned for home remodeling and home improvement needs (best use for budget control and fraud protection)
  3. Use your credit card to:
    ·   pay contractors
      ·   buy supplies
      ·   place an advance on your renovation project
      · pick up that new bedroom suite
      · use it like a money account for any other emergency; i.e., school education, debt consolidation, etc.
       
      · start earning award points for using your card to fund home improvement purchases.
      · your award card is accepted at any merchant that accepts credit cards
      · you can payoff your award card with your equity line account or any other deposit
      · protect your home equity from exposure by using a card not tied to the equity account

  4. Use your home equity line to payoff the total amount of your credit card balance when the monthly statement comes in.

    Using your credit card for home remodeling and improvement gives you 25-days of free money plus awards points for every dollar you spend. Those award points can add up fast depending on your type of home remodeling.

  5. Your line of credit remains open whenever you need to advance yourself funds. When you are finished paying off your home remodeling project, you can simply use your line to finance other family needs such as college, auto purchase, and more.

    link to our banker line of credit for illustration

 

Now What are the Benefits:

  1. You will not be restricted by the number of times
    that you access your equity line account since one advance will be used to pay your credit card.
  2. By using your card, you will get 25-days of FREE money.
    Since your cards give you a 25-day grace period, your bank equity will only be used one every 25 days. Thus lowering your financing costs since your home improvement charges will be sitting on your credit card FREE of charge for 25 days.
  3. You can use the award card
    at participating merchants without exposing your equity line account to potential fraud and misuse.
search your home equity among multiple lenders for best option - see list
request a rate quote and terms from up to four lenders
  or dial toll-free: 1-877-777-1370

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Helpful Tools

Some helpful forms to select and manage your financing:

home equity financing map
lender comparison sheet
bank equity 10-step plan
loan amortization worksheet

 

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