For most of us, eventually settling into a true home means working our ways through several rental apartments and other “starter” residences as we build the credit and funds needed to purchase a property fit for a family. If you are lucky enough, however, you may be able to find a single home along the way that has the realistic potential for expansion as time goes on.
Let’s face it- we fall in love with neighborhoods, our children fall in love with their friends at school, and we all tend to get very comfortable in our homes; no one ever wants to go through a move unless there are significantly extenuating circumstances. Further repairing or placing an addition on your current home to accommodate for a growing family is almost always the preference, but there is just one problem- the cost associated with such an upgrade.
When you sell a home to move into a new one, you are banking on turning a profit on your original investment and using said funds to aid in securing a new residence. On the other hand, an addition is often placed on a house at the full expense of the homeowner without them selling off any equity to do so.
While there are certain life events like bonuses or promotions at work, and inheritances that can provide the necessary funds to strongly consider this type of renovation, the majority of us don’t have the time to wait for them to come along.
So how does the common homeowner pay for an addition on his house without relying upon basically hitting the lotto at work or in their personal life? Listen to the experts and take a look at these three easy ways to lock up the funds you need for expanding your home’s capabilities today!
- Explore Home Equity Loans – A home equity loan is essential borrowing money against the portion of equity you own in your house. You build equity over time by paying off your mortgage and thus increasing the amount of ownership you have over the value of the home. The best part? There are much lower interest rates at play here because you are borrowing money against the value of your home. Additionally, these loans are considered secured and carry their own significant tax breaks. You can also typically expect payment in lump sum, which can be convenient for paying off contractors for labor and materials.
- Pay Close Attention to Tax Credits and Rebates– Due your due diligence to fully investigate potential state income tax credits and rebates that can help you secure the large sums of money needed for an addition. For example, consumers who choose to both help out their environment and save themselves some money on monthly electric bills with solar paneling, are also subject to certain financial privileges for “making energy efficient improvements.” While actually going through the construction phase of your addition, you can also get rebates on certain environment and power friendly items like skylights, doors, windows, and certain types of roofing and insulation. Getting money back for household improvements that are aesthetically pleasing is a double win!
- Research a Title 1 Loan– Now this one comes with the caveat that you need to have a certain level of higher credit and income to qualify, but there are significant advantages of a Title 1 loan through a private lender; the first of which- you don’t need equity on your current house to qualify for the loan. Furthermore, these loans are insured by the U.S. Department of Housing and Urban Development against loss on all property improvement loans made. This type of assistance definitely requires a bit of knowledge in the area or assistance from a financial planning professional. Remember, all rates involved in this type of loan are actually negotiable, and if your loan is over $7,500, it will be secured through your mortgage.