ALL of us got ‘reacquainted’ with our homes last year, when the pandemic required that we live, work, and play inside the same four walls.
During the past 12 months, you MAY have identified a few home improvements projects you are ready to get done THIS year!
Faviola Alba from Arvest Bank has some ideas on how to make those projects fit into your plan financially, as well.
Homeowners who do not have the cash to pay for a home improvement project or the available credit on their credit card or additional financing options, may consider using can use the equity they have in their home for renovation projects.
If you have a certain amount of equity in your home, you can take out a home equity loan.
Banks give homeowners a loan based on that equity – the money you have already paid on your home – and that equity serves as the collateral for the loan.
Homeowners pay against that loan until the loan is paid off.
Home equity loans usually have lower interest rates than a personal loan because your home is being used as collateral.
Another option using the equity in your home is a home equity line of credit, or HELOC.
That is when banks provide a customer a line of credit to borrow against the amount of money they have paid on their home.
This is like a credit card or a personal line of credit.
Homeowners borrow against the equity they have in their home, they pay down that line of credit just like they would a credit card or personal line of credit, and they can continue to borrow and pay off that line of credit until the line of credit expires.
The difference between this line of credit, credit card, or a home improvement loan is you may be able to borrow more with this option.