Buying a home is fun and the pride that comes with ownership is priceless, but owning the home and making it your own are two entirely different things. When you first take on a home mortgage it can seem daunting, having such a big chunk of money come out of your monthly cash flow. But as you begin to pay down the mortgage and get into the routine of having a mortgage, it just becomes what you do. As an added bonus, you pay down the mortgage and the equity increases, which is like having a nice little chunk of money saved away for a rainy day. At some point you may decide that you want to update or modernize the house a little bit. Unless you bought the home new, the house you’re living in was previously created to somebody else’s specifications. Today, you can take advantage of the low FHA current refinance rates to update your home and make it truly yours.
Securing Financing For the Home Facelift
When updating a home you may want to redo the kitchen or bathroom, or remodel certain living areas to put in a family room or an extension. You may even want to finish the basement. Any major improvement on the home is going to require thousands of dollars. There are a few different ways to get this money. You may have a savings account set aside for this purpose, although most people don’t. You might be able to get a new line of credit for thousands of dollars and pay for it that way, but more than likely you’ll end up paying very high interest rates. You could even secure a HELOC, which is a home equity line of credit. This is basically a second mortgage. All of these things are options, but any situation where you are borrowing money aside from your mortgage typically has a higher interest rate associated with it than a standard home loan.
A different option for homeowners is to get a cash out refinance on the home. FHA current refinance rates are pretty attractive, especially to the homeowner who has his finances in a good place. With a cash out refinance you can pull a portion of the equity out of the home and use it for whatever you want, including a remodel of your existing home. It is a great way to get financing for your new project.
The beauty of the cash out option is that it just becomes a part of your monthly payment. Yes, your payment will increase because the loan amount increases, but you are still only dealing with one payment. Also, the funds can be used however you choose. If you want to tear out the wall between the kitchen and living room and make a wide open living space, you will be able to. Another great benefit to using the equity for this project is that by remodeling and updating the home you are essentially investing in the home, so the funds you pulled out are being used to increase the value of the home. This is a win-win situation.
Securing the FHA Current Refinance Rates
When you get a cash out refinance on a home you are basically taking out a new mortgage and replacing the old one. To secure the FHA current refinance rates you will have to follow many of the same steps you followed to secure the original loan. You will need to provide the lender with your financial information, including your work history, assets, savings, etc. They will also pull your credit report to determine what you are able to qualify for. In addition to this, you will need to have an appraisal done on the home, and after the process is completed, you will be required to pay the closing costs. In some cases you may be able to have these costs rolled into the new loan.
After approval and completion, the new loan will be used to pay off the old mortgage, some of it will be used to pay for the fees (such as closing costs), and the rest will be given to you to remodel your home.
An FHA cash out refinance is a really good option to consider if you’re wanting to do some major improvements on your home. It is a great way to secure thousands of dollars at a decent interest rate. Yes, you are increasing your debt but the investment in the home may pay off in the long run.