One of the smartest things to do before selling a home is to make sure that things are in great shape before listing the home for sale. Doing this will make sure that the home will fetch a good price. However, this is not easy to pull-off for those who do not have plenty of cash that can be used to pay for a house remodel. This is where having a substantial amount of home equity helps. Homeowners with a high home equity can pay for a house remodel using a home equity loan. The question is, is this a good idea?
Why Go for a Home Equity Loan?
Unlike other loans, a home equity loan uses the value that a homeowner owns in a home as collateral. Because a home equity loan is a secured loan, it is easier approved and comes with a lower interest rate than unsecured loans. It is true that tapping home equity can be scary for some, but know that with proper planning and money management, using a home equity loan to pay for a house remodel is not only a good idea, it is a great one!
Nobody wants to sell a home for less than the price that it was bought for. The hard fact is that this is the case for a lot of people more so if the location turned bad or if the home was poorly maintained. To make sure that the home’s value does not depreciate, regular repairs must be done and some features should be upgraded periodically.
When to Use a Loan
Paying for home improvement in cash is ideal but not everyone has a large sum of money that can be used however and whenever. Using a low-interest loan like a home equity loan is the best-case scenario for a lot of people instead of taking a loss by not upgrading or taking out an expensive personal loan. Note that one should be careful with spending even when using funds from a loan secured by home equity.
Take into account that using a home equity loan to pay for a house remodel is an investment and not really an expenditure. After some much-needed remodeling and improvement, an old and dilapidated home can turn into a beautiful and functional home with a high resale value. Even an emergency remodeling or repair can turn into a sound investment when chosen wisely and done the right way.
Important Things to Note
Keep in mind that home’s value can play a huge part in what becomes of the home equity. There are many factors that are related to property value aside from renovations. With this said, using a home equity loan to pay for a house remodel that will, in turn, further increase home equity is certainly a good idea.
If you’re seriously considering tapping into your home equity, be contact professionals like us in Mortgage Central Canada. We’ll be happy to answer your questions as well as guide you in in choosing which home equity loan product is best for your needs.