More often than not, creating the perfect outdoor space may require you to conduct a backyard remodel. After staying in your house for years, it might be time to switch up a few things. So, as you upgrade your interior decor, don’t forget to revitalize the yard too. Even though you may end up spending thousands of dollars, a remodel provides incredible benefits at the end of the day. However, not all homeowners have sufficient cash at hand when planning a backyard remodel. Fortunately, there is a broad spectrum of financing options that you can select to help you conduct a remodel.
Financing options for a backyard remodel
Home equity loan financing
One of the main types of financing options you can use for a backyard remodel is using a home equity loan. These types of loans require you to borrow from your home’s equity. Also, you have to secure the loan using your house. So, failure to pay the loan would lead to the foreclosure of your house. Even so, a home equity loan is quite affordable since the interest rates are often fixed. Most financing institutions allow you to take the loan for home improvement purposes, including a remodel. It could be for pool construction, among other outdoor home revamps. Home equity loans often take a shorter processing time and are cheaper than cash-out refinancing loans.
The second way to finance a backyard remodel is by using the cash-out refinancing method. This financing method is only eligible to homeowners with an existing mortgage loan. What happens is that homeowners borrow a remodel loan from the same financing institution that issues the mortgage loan. Then, the borrowed amount will replace the existing mortgage. You can use cash-out refinancing to conduct a wide range of remodel options, from pool construction to installing an outdoor kitchen.
One of the main advantages of a cash-out refinance is that you can apply for a loan that equals up to 80% of the home’s equity. The interest rates of this loan are also relatively favorable. With this loan, you also have the advantage of shortening or prolonging the payment period. Nonetheless, since you are applying for a new loan on top of your mortgage, financing institutions must analyze your credibility and financial history once again. Moreover, cash-out refinance increases your mortgage value. So, there is a high chance that the monthly payment installments will increase as well. All in all, the cash-out refinancing method works well if you have an existing mortgage; even so, it all depends on your requirements.
Personal loans for backyard remodeling
The next type of financing option is personal loans. Personal loans are ideal when you plan to conduct backyard remodeling. These loans do not need your house to serve as collateral. Therefore, if you fail to pay the loan, you would still have your assets intact. Personal loans are available in almost all financing institutions, and they incur a shorter processing period. In fact, you can obtain a personal loan in just a few days or a week.
Nonetheless, personal loans are relatively costly. They are more expensive compared to other loans. Thus, if you are working under a fixed budget, they may not be the best option for you.
Ultimately, what is the best way to finance a backyard remodel?
The best way to finance your backyard remodel depends on your requirements. But generally, if you are looking to save a few coins, a cash-out refinancing loan would be your best option. This loan incurs the lowest interest rates. Additionally, cash-out refinancing loans are relatively flexible; you can decrease or increase your payment period with them. Another ideal option is a home equity loan. These loans are cheaper since they have a fixed interest rate, unlike other loans. But your house would be at risk of foreclosure with a home equity loan. On the flip side, if you are looking for a quick loan, personal loans are the best. Unlike other loans, financial institutions don’t check for so many things before granting you the loan.
What credit score should I have to qualify for a backyard remodel loan?
Before a financial institution approves your loan request, they will have to evaluate your credit score and economic history. Typically, your credit score is eligible when it lies within a range of 600 to 680. The exact value depends on the type of financing institution. Conversely, loans like home equity loans and home equity line of credit require a credit score of at least 720. It would be best if you knew all the requirements for a loan before you apply for it. Consequently, you will avoid unnecessary disappointments.
If you plan on conducting a backyard remodel, you might consider looking at the various financing options available. Doing this will help you complete the project successfully without any hiccups. Luckily, most financing institutions are often willing to grant you your preferred type of loan. All you have to do is apply for the loan. Our professionals at Southern Poolscapes are willing to help you get the pool of your dreams.
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