I want to remodel—Is a construction loan better than refinancing?

mortgage lender Heritage Ranch

Sooner or later, everyone who lives in a home for any length of time wants to do some remodeling. Financing that remodel doesn’t have to be a headache-inducing experience. “There are some options that protect you against a new, higher interest rate, and the stresses of refinancing or trying to get a construction loan,” said Marc Coons, the Heritage Ranch mortgage lender.

First thing to do is learn what the options are for financing a remodeling project:

  • A construction loan is generally more useful for large renovations and is paid out to the contractor in stages. Usually, one phase of the project needs to be completed before the next phase is funded. The catch can be that essentially a construction loan is refinancing the home being renovated (or built) that is converted to a mortgage when the project is finished.
  • Refinancing is replacing an existing mortgage with a new one and often involves a different payment amount and a different interest rate. If home interest rates are low, it might benefit you to refinance.
  • A HELOC is a home equity line of credit that you can use to borrow against the equity in your home. Basically, a HELOC works something like a credit card. Use money when you need it and make regular payments in addition to your regular house payment.   

Which one of these loans is going to work best for you? That’s the question for Marc Coons. Each type of loan has pros and cons. For example, when lending rates are low, a construction loan might be just as beneficial as refinancing, especially if the renovations are extensive enough that you have to live somewhere else during the project.

With a construction loan, you only pay for what you use until the project is completed, meaning that for an extensive project, you don’t have to worry about making the mortgage payment while paying rent somewhere else.

For a regular refinance, or a HELOC, you still have to make the payments. Things can get pretty costly if you are also paying rent for a temporary place to live.

The Heritage Ranch mortgage lender, Mar Coons, has been helping people buy or refinance their homes on the Central Coast since 2004. Working with a team of professional loan consultants and backed the resources of Caliber Home Loans, Marc has access to hundreds of lenders who are interested in helping people buy a home, or upgrade their present home to a fresh, new look. 

Working with Marc, you can get a thorough understanding of the loan options available to you, the pros and cons of each, and which type of loan has the best benefits. Mar makes sure he thoroughly understands your circumstances and after filling out a single application, Marc and his team get started, reaching out to a variety of lenders to make sure you get the amount you want with the best terms and interest rate. Marc responds to questions from potential lenders and communicates with you during the entire process.  

A 30-year local resident, Marc lives the Central Coast lifestyle and is committed to supporting you in your remodeling financing efforts. Give him a call today!