Unlock the potential of home improvement, loan options and opportunities

Homeowners who want to enhance their current living space may wonder where to begin. Popular television shows reveal unbelievable makeovers and transformations. But, when you actually do a home renovation, it can seem daunting, especially financially.

Fortunately, there are loan options available, helping to make renovations, add-ons and upgrades a reality. Continue reading to get familiar with different loan options for homeowners.

HELOCs provide a flexible borrowing solution for homeowners who have equity in their property. Equity is the difference between the current value of the home and the outstanding mortgage balance. HELOCs allow a person to borrow against the equity and access a line of credit, similar to a credit card.

The advantage of an HELOC is its revolving structure. Individuals can draw funds as needed over a period of 10 years, and only pay interest on the amount used. After the period ends, the amount borrowed must be repaid, as well as any interest.

HELOCs are ideal for home improvements that might take longer or when there are several projects that are going to take place.

Home equity loans, also known as second mortgages, provide a lump-sum amount based on the equity in a home. Unlike HELOCs, they have a fixed interest rate and a predetermined repayment term. This makes home equity loans more suitable for one-time renovation expenses like a kitchen remodel or an addition.

With predictable monthly payments, homeowners can budget accordingly and have peace of mind knowing precisely when the loan will be paid off.

Unsecured loan products can be an attractive option for individuals who don’t have substantial equity in their home or don’t want to leverage their home as collateral. These loans are not tied to a home, meaning the borrower isn’t at risk of losing their home if they default on payments. However, since they are not backed by collateral, unsecured loans typically have higher interest rates compared to secured options like HELOCs and home equity loans.

This type of loan is usually more suitable for smaller renovation projects or for individuals in need of a quick financial solution.

If substantial home improvements are needed and someone wants to refinance their mortgage, a full home refinance might be the best choice. This option allows a person to replace their existing mortgage with a new one that includes the funds needed to complete the desired upgrades. In addition, it is not uncommon for the refinanced mortgage payment to be close to the original mortgage payment. While a full refinance offers a streamlined approach to managing both a mortgage and renovation funding, it is important to carefully evaluate the associated costs and potential long-term impact on personal finances.

Home improvements can be a rewarding investment, improving quality of life as well as a property’s value. Through the various loans that exist, homeowners can select the financing option that best suits their specific needs and budget.

Whether it’s a home equity line of credit, home equity loan, unsecured loan product or full refinance, taking on a well-planned home improvement project can turn a house into a dream home.

Learn more at bankfirstfed.com.

Zach Kelsey is Vice President and Regional Lending Manager at First Federal Bank. He enjoys being able to change people’s lives by using the equity in their homes to consolidate debt and lower their household debt load drastically. He earned his bachelor’s degree in marketing and computer information systems from Boise State. He is a lifetime resident of Idaho and resides in Twin Falls.

This content was produced by Brand Ave. Studios. The news and editorial departments had no role in its creation or display. Brand Ave. Studios connects advertisers with a targeted audience through compelling content programs, from concept to production and distribution. For more information contact [email protected].