Life is unpredictable. From illness to divorce to job loss, many factors can take a toll on your income that can leave you struggling to pay your monthly mortgage payments on time. If you have lost your job and are unable to make your monthly mortgage payments, job loss mortgage insurance can help cover those […]
3 Types of Home Loans in St. Louis for Home Improvement Needs
Did you know that there are different types of home loans in St. Louis that can help cover the cost of renovations and repairs? These loans do exist, however they are not called home improvement loans. Let’s say you are itching to upgrade your kitchen, yet you feel that these expenses would cost you money that you don’t have. Some homeowners don’t realize there are multiple ways to finance these renovation projects. Projects can both add value to your home and protect your investment.
The four popular types of home loans in St. Louis are home equity, home equity line of credit (HELOC), energy efficient mortgage, or cash out refinance.
Home Equity Loan:
Home equity is using the equity of your loan as collateral. The equity of the loan is the amount of your loan that you have “paid off” and therefore “own” in your home. This option is generally referred to as a second mortgage because this loan is taken out in addition to the primary mortgage. This loan comes in a lump payment and is paid off in regular intervals at a fixed rate.
Home Equity Line of Credit (HELOC):
A home equity line of credit (HELOC) is the second option. This option is similar to a home equity loan. However, instead of paying in a lump sum, you get a revolving credit line. You can qualify for a certain amount based on the equity of your home. Many individuals use HELOCs for home improvements, but they can also be used for college tuition and other expenses.
Energy Efficient Mortgage (EEM):
Your third option is the energy efficient mortgage, also known as EEM. This works similar to a second loan that is rolled into your primary one. You can either get an EEM when you first get your mortgage, or add it on during your refinance.
The final home loan option is the cash out or cash back refinance, which is refinancing your home for an outstanding balance on your existing loan. This strategy is often used when the value of your home has increased in value over the years. For example, you may have bought a home for $200,000 and paid off $90,000 of the mortgage over the past 10 years and the home has increased its value up to $400,000. After 10 years you owe $110,000 and decide to refinance for $250,000 which leaves you $140,000 in cash for upgrading your home.
These types of home loans in St. Louis will give you that extra boost to have the funds to fix up your home. If you are interested in learning more about the different home loans in St. Louis that work best for your situation, contact us today to get a free consultation.