Putting on a garage addition to your home is a major undertaking – one that will improve the value of your home and give you more space to live and play. This is actually a great time to refinance your mortgage so you get a better deal and spend less per month. According to Houston Garage Doors, refinancing after improving your garage is made easier when you partner with a financial institution that can give you the rate you’ve been looking for. Although you’ll be saving cash on your monthly payments, it is important to factor in the cost of closing and points too.
Lower Your Monthly Payment
This is the primary reason why you would refinance after improving your garage. You will be able to grow your equity and pay off the mortgage in a quicker period of time through a refinance, according to Money Crashers. With interest payments making up a big part of your monthly payment, particularly within the first decade of your loan, this is where most of your money will be going. What happens when you refinance is that you begin to pay a reduced rate of interest with more of your money applied toward principal. If you want to get the most bang for your buck, take that extra money you’re saving and use it to pay down your principal so your home will be free and clear much more quickly. This is why it’s important to consider exactly what the refinance will end up costing you in the long term to make sure it’s worth the extra steps of going through this process. You’ll also have to look into the fees that come with any refinance, which go toward anything from the application itself and the title insurance to the title search and attorney costs.
Getting Back to Basics
When you refinance after a major addition such as a garage, Mortgage Calculators says this gives you the opportunity to slash your monthly mortgage payments and interest rate; withdraw cash for other major purchases like furniture and equipment to outfit your new garage; and even change mortgage companies. It takes equity to be able to refinance so if you’re a brand new homeowner, this probably won’t be a good option for you.
Refinancing after a garage remodel doesn’t come without its risks. You can do some damage to your credit score each time you refinance, which is why you should only do this after you’ve experienced a boost in your home’s value, a reduction in your ratio of debt to income or a major boost in your credit score. Whatever rate you’re given by the bank will depend on your credit standing, along with market changes and home value increases, says the Federal Reserve Board. They point out that the best time to refinance is right after completing a big home improvement, and a garage certainly qualifies for that. However, that said, don’t consider refinancing if you are thinking about moving out of that home in the next couple of years, as it just won’t be worth your efforts.
Sit down with a few different lenders to find out your best option for refinancing after your garage project is finished.
This article was contributed on behalf of Houston Garage Doors, your number one choice when looking for garage door repair services in Houston. Check out their website today and see how they can help you!
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