When done correctly, home improvements can pay off tremendously in the long run. When buyers search for houses for sale in Orlando, they often want to find properties that are updated, refreshed, and in “move-in” condition. Before putting your home on the Orlando, FL, real estate market, you might want to consider making home improvements to increase your ROI.
Home improvement projects can be costly, depending on the scale of the renovations, the time it’ll take to complete, the quality of materials used, and whether or not your hire a team of professionals to oversee the updates. If you don’t have the savings to pay for these improvements outright, there are financing options available to you, from borrowing from a friend or family member to cash-out refinancing and beyond.
Home improvement projects can be costly, depending on the scale of the renovations, the time it’ll take to complete, the quality of materials used, and whether or not your hire a team of professionals to oversee the updates. If you don’t have the savings to pay for these improvements outright, there are financing options available to you, from borrowing from a friend or family member to cash-out refinancing and beyond.
Borrow from a loved one
It can be awkward to ask for money from a loved one, but that might be the cheapest route if you’re in need of funds. If you opt for this method, take the time to consider how to borrow with the least amount of strain on your relationship.
You might feel as though you’d be able to pay the money back easily, but there’s always a chance it might not work out that way. If you can’t pay back the money you borrowed in a timely manner, this might impact your relationship negatively.
If you decide to borrow money from a loved one, fully explain your intentions. Discuss your plans with complete transparency. For example, if you plan on repaying the money after you sell your home, provide your loved one with the date you will repay them.
Your financial actions will likely be under more scrutiny if you decide to borrow from a loved one. If you plan to pay for anything “expensive” before repaying your loved one, such as going on vacation or buying a new vehicle, your loved one might have second thoughts about their decision to give you a loan.
You might feel as though you’d be able to pay the money back easily, but there’s always a chance it might not work out that way. If you can’t pay back the money you borrowed in a timely manner, this might impact your relationship negatively.
If you decide to borrow money from a loved one, fully explain your intentions. Discuss your plans with complete transparency. For example, if you plan on repaying the money after you sell your home, provide your loved one with the date you will repay them.
Your financial actions will likely be under more scrutiny if you decide to borrow from a loved one. If you plan to pay for anything “expensive” before repaying your loved one, such as going on vacation or buying a new vehicle, your loved one might have second thoughts about their decision to give you a loan.
Consider a cash-out refinance
If you can get a lower rate on a mortgage than the one you’re currently paying, then a cash-out refinance might be an excellent option to pay for home improvements. A cash-out refinance permits you to use the equity you’ve already accrued from your mortgage payments. This refinancing scenario is typically based on 80% of the appraised value of your home.
If you opt for this loan, know that the rates will be affected by factors related to your personal financial history and the overall country’s economic status. Your debt-to-income ratio, credit score, employment history, and other factors will determine your interest rate.
The good news is that renovating your home will likely increase its appraised value. If you have any questions about renovations that can increase your ROI and make a cash-out refinance worthwhile, talk to a real estate professional.
If you opt for this loan, know that the rates will be affected by factors related to your personal financial history and the overall country’s economic status. Your debt-to-income ratio, credit score, employment history, and other factors will determine your interest rate.
The good news is that renovating your home will likely increase its appraised value. If you have any questions about renovations that can increase your ROI and make a cash-out refinance worthwhile, talk to a real estate professional.
Obtain a Home Equity Line of Credit (HELOC)
While a cash-out refinance will replace your current mortgage with an entirely new one, a home equity line of credit requires you to pay an additional mortgage each month unless you’ve already paid off your previous mortgage.
A HELOC uses your stored equity toward a new loan. Similarly to a cash-out refinance, the offered rate of your HELOC will depend upon factors such as your credit score, debt-to-income ratio, and others.
Unlike a cash-out refinance, a HELOC does not add additional time to your current mortgage since it’s a separate line of credit. While easily confused by those who aren’t loan officers, a home equity line of credit and a home equity loan are two different things. Since a home equity loan has a fixed rate for the duration of the loan, you might pay more for it over time. Unlike a HELOC, a home equity loan presents you with a lump sum, allowing you to fund your home repairs all at once.
If you plan on tackling home improvements over time, a HELOC can add flexibility to your borrowing and repayment schedule.
A HELOC uses your stored equity toward a new loan. Similarly to a cash-out refinance, the offered rate of your HELOC will depend upon factors such as your credit score, debt-to-income ratio, and others.
Unlike a cash-out refinance, a HELOC does not add additional time to your current mortgage since it’s a separate line of credit. While easily confused by those who aren’t loan officers, a home equity line of credit and a home equity loan are two different things. Since a home equity loan has a fixed rate for the duration of the loan, you might pay more for it over time. Unlike a HELOC, a home equity loan presents you with a lump sum, allowing you to fund your home repairs all at once.
If you plan on tackling home improvements over time, a HELOC can add flexibility to your borrowing and repayment schedule.
Get a Fannie Mae HomeStyle renovation loan
If you’re looking at single-family homes for sale in Orlando, Florida, and you’ve located one that needs a bit—or a lot—of work, then you might want to consider a Fannie Mae HomeStyle renovation loan. This loan allows you to finance the purchase of your home and its renovations. You can make any number of improvements on your new fixer-upper upper property.
However, this loan does have limitations. Those approved can borrow up to a certain amount based on the amount the home will be appraised for after all intended updates are complete. Also, your renovations must be permanently attached to your property. If you want to tackle several projects without the help of a professional, you can finance a small, financial institution-specified percentage of your total borrowings to use for the cost of DIY supplies.
However, this loan does have limitations. Those approved can borrow up to a certain amount based on the amount the home will be appraised for after all intended updates are complete. Also, your renovations must be permanently attached to your property. If you want to tackle several projects without the help of a professional, you can finance a small, financial institution-specified percentage of your total borrowings to use for the cost of DIY supplies.
Need help from a professional?
Have you found a home you love and need a skilled expert to help you handle the sale? Are you looking at houses and land for sale in Orlando, or do you want to sell your property? Regardless of your real estate goals, real estate specialist Laura Q. Diss at Q Boutique Realty would be delighted to help. With years of experience selling and purchasing properties since 2009, Laura Q. Diss boasts a phenomenal set of invaluable skills and knowledge that can help you confidently conduct your home search or sell for top dollar. Laura has an array of accomplishments under her belt; in 2021, Laura opened a top-rated and accredited real estate institution. She loves to give back to the industry and uses her real estate broker and instructor licenses to help clients and industry professionals reach their full potential. If you’re ready to reap the rewards of working with an esteemed Florida Real Estate Agent, contact Laura today for a free consultation.
