Monday, March 30, 2015

How to Find the Right Financing Option for Your Home Renovation

There are several ways to pay for your home improvement project. Which one is right for you? That depends on a range of factors, including project cost, your household budget, how much you’ve saved, and how soon you plan to start work. This checklist of pros and cons can help you choose the financing option that best fits your budget and your project.

Option No. 1: Pay cash

If you’ve saved money to pay for the project, or received a big tax refund or work bonus, paying cash may be a good option. You won’t take on any more debt and you’ll have immediate access to the money, unless it’s tied up in a certificate of deposit or an investment account.
Unless you’re a super saver, it could take years to save enough to pay for a large project like a kitchen overhaul, which can cost $50,000 or more.

Option No. 2: Pay with your credit card

If you have a low-interest credit card or a 0% balance-transfer option, you can also consider paying with a credit card. You won’t have to go through a lengthy approval process, especially if you’ve already been approved for the card.
Many contractors won’t accept credit card payments. While you can get a cash advance through your credit card, the interest rates are often very high. If you’re using a card with a limited-time, low introductory interest rate and don’t pay off the full balance before the offer ends, you’ll face much higher monthly payments and end up paying a lot of interest on the remaining balance. In addition, the length of introductory offers is usually only a year or a year and a half, which gives you a very tight time frame for paying off the debt.

Option No. 3: Get an unsecured personal loan

In contrast to credit cards, an unsecured loan—also known as a personal loan—can have a fixed interest rate and a fixed monthly payment. This type of loan does not require you to put up your house as collateral, so your home is not at risk. And, you can still qualify if you haven’t built enough equity. The application requires minimal documentation, so the process takes just a few minutes. And, you’ll receive your money in a few days. In addition, there are no closing costs and you usually have several years to pay back the loan.
Interest rates for unsecured loans can be higher than those for home equity or other secured loans, which means you pay more interest over the life of the loan. You cannot deduct loan interest from your taxes.

Option No. 4: Take out a home equity loan

If you have equity in your home, a home equity loan or line of credit can help you pay for a more expensive project. These loans usually have lower interest rates, and you may be able to deduct the interest and any points on your income taxes as well. In addition, you may have longer to pay back the loan—anywhere from five to 30 years.
This type of loan is also called a secured loan. That means your house is collateral for the loan and, if you don’t pay it back, the lender can take your home. It can take six to eight weeks to complete the application process and receive your money. Though the interest rate may be lower, the fees can add up. You’ll pay closing costs—including the cost of an appraisal, attorney’s fees, title search charges, and more—which can add up to several thousand dollars. The amount you can borrow will also be limited to a percentage of your home’s value minus any current mortgage.
Before you decide how to pay for your home improvement project, think about which option best suits your budget, the amount you need to borrow, and how soon you’ll need the money. Doing so will help to ensure that you get the loan that’s right for you.
This article is intended to provide generalized information to assist the general public in making financial decisions; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Friday, February 27, 2015


As we roll into spring, the U.S. housing market continues to grow and improve. For homeowners, the continued improvement of the housing market is fantastic news.

For homeowners, the last four or five years have been a roller coaster. First came the peak of the housing bubble, followed by its inevitable crash. Millions of homeowners found themselves underwater and under the threat of foreclosure while others, who might otherwise have sold their homes during a healthier market, found themselves with few options until the market recovered.

However, beginning in 2012 the housing market started to rebound, and homeowners began finding themselves in dramatically improving situations. 2013 saw home prices skyrocket, increasing by double-digit percentages, and things continued to improve in 2014, though more slowly. Today, the housing market finds itself in “full bloom,” steadily improving and bringing even more good news to homeowners.

1) The 2014 Recovery and Where We Stand Today
Several factors fueled the housing market recovery of the last few years. From 2012 to the end of 2013, the housing market rebounded drastically. As economic conditions began to improve, investors and other buyers helped clear the inventory of distressed homes, buying undervalued homes in foreclosures or short sales.

With fewer distressed properties weighing down home prices, prices were able to start recovering. At the same time, homebuyers entered the market faster than homes became available, and simple supply-and-demand furthered the spike in prices.

According to the National Association of Realtors, the national average home price increased 11.5 percent over 2013 compared to 2012, the strongest gain in home prices since 2005. Homeowners who found themselves underwater on their mortgages during the housing market crash finally regained much of the equity they lost.

In 2014, home price growth slowed. With fewer low priced homes for sale and more balanced levels of supply supply-and-demand, price increases normalized. Home values still increased, though more modestly.

Today, home prices continue to increase at the more sustainable level (still growing, but without sidelining new buyers). This year, the housing market will depend more on job growth, rising incomes, and more new homeowners entering the market to fuel growth.

So, what does all of this mean for current homeowners? No matter what your situation was during the peak of the housing market crisis, chances are your situation has improved dramatically due to the huge gains we’ve seen in the housing market. If you’re thinking of selling your home, now may be the perfect time.

2. Home Prices Have Increased, And Will Continue To Do So!
As mentioned previously, from 2012 to today home prices have increased significantly. According to the investment group BlackRock, home values appreciated more than 20 percent since the first quarter of 2012 to the end of 2014, bringing many homes close to their pre-crisis peak prices. This dramatic increase in prices helped more than 4 million homeowners regain equity in 2013, and millions more in 2014.

This year, experts predict home prices will rise 4 to 5 percent. Two primary factors will continue to help push home prices up: the number of homes for sale remains low compared to historic numbers and demand, and the demand for homes continues to increase as economic conditions improve.

With the growth in home prices slowing to , many homeowners are now looking to, many homeowners are now looking to sell their homes and take advantage of the low mortgage rates available today.

3. Mortgage Interest Rates are Low Now, But Rising This Year
In recent months, mortgages rates have hovered at yearly and near historic lows. Towards the end of last year, mortgage rates hit a low of 3.89 percent.

Since then, they have started to increase. According to the Mortgage Bankers’ Association, 30-year,fixed rate mortgages will rise to 4.5 to 5 percent by the end of the year3. The increase may not seem like much, but slight changes in mortgage rates can have a big impact on your ability to buy a new home.
A 1% increase in rates can reduce your buying power by as much as 10%4.

As the year goes on, buying a new home will become less affordable because both home prices and mortgages are increasing. Rates are expected to start increasing around the middle of this year, so if you’re thinking of selling your home and buying another, you need to act fast to take advantage of these
incredible rates!

What’s Your Home Worth Today?
If you have been waiting to sell your home, especially if you or someone you know is having difficulty with their mortgage, it is time for you to start exploring your options. Your home is likely worth more than you realize, and right now mortgage rates and home prices are opening the door for many homeowners to sell and buy homes. The most important thing, however, is to know where you stand.

Do you know what your home is worth today? What are homes in the area selling for? These are all questions to which the answers have changed significantly in the last few months and knowing what your specific situation is will help you make more informed choices.