Adalberto

Every home could use a little work on it once in a while. Or, even better yet, additions could be made, or remodeling would sure put more spice and value into your home. Each of these improvements, of course, takes money. Lenders offer a number of choices to you when it comes to getting money for your home improvements. Here are some of the loan options you will see.

First Mortgages

The first choice you may want to consider is to get a first mortgage. This assumes that you are looking to refinance your first mortgage. As far as interest goes, getting a first mortgage will give you lower rates than a second mortgage. And if you are looking to refinance for that better deal, and get money for fixing up your home, then you can simply combine the two.

Each of these options, though, assumes that you want to keep on living in your present house for some time to come. You will need to stay there for a minimum of five years (seven years is better) in order to recover your costs from refinancing.

Second Mortgages

A second mortgage is available for fixing up your home in a couple of different ways. Generally, you will have a choice of a home equity loan or a home equity line of credit. A second mortgage normally has a higher interest rate than a first mortgage, and you will usually have less time to pay it back, with 15 years being the average, although longer or shorter periods are also available.

A home equity loan allows you to tap into the equity of your home and use it for whatever purposes you want. It is a typical mortgage that is usually adjustable rate.

A home equity line of credit (HELOC), however, has some interesting differences. You are given a limit on your credit, based on your equity and ability to repay it, and a certain amount of time that you can draw from this account. You can use the money for whatever you want and you can draw as little as you want, or take it all up to the limit. You pay on the interest during the draw period, and then have one of three basic options at the end of the draw period - which could be up to around eleven years. At that time you could have your credit limit reestablished, you could owe the whole amount as a balloon payment, or you could start making payments that amortize. Interest is only owed on the amount of money you actually withdraw from the account.

Choosing Your Mortgage

You will have to make some choices in order for you to get the deal you want. You should look around at a number of mortgage quotes, and then carefully compare the various details of the mortgage - especially watch the fees. Wait until you can get lower interest rates, by watching the market, and then go for the best offer with the terms you want. And when it comes tax time, you can take off much of the cost that is used to fix up your home.

Joseph Kenny writes for the Personal Loans Store, where you can loans and read the article on Payment Protection Insurance: The True Cost.
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posted by jamalvmn  # 2:24 PM