The nation has been rebounding after the collapse of the housing bubble in 2008. The Zillow Home Value Index is reporting that in August of 2016, home values in the Santander Bank region have gone up on average 3.3% year over year, and they predict an increase of 1.8% over the next year. So what does that mean for you as an existing homeowner?
If you’re in the market for a new home, this might not be the best news. In an interview with CNBC David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, reported, “Home prices are rising very rapidly — twice the rate of inflation. There is very, very little supply. There is four to five months’ supply in the market right now, which is quite low.”
So the question is, “Should I stay or should I go?” Depending on what you are looking for in a new home, whether it’s more space or upgraded features, the limited supply of real estate may make renovations to your current home a better option. If your home equity has increased, you have more collateral available for borrowing purposes, and may be able to more easily finance home renovations.
How to Finance Home Improvements
There are many ways to finance home renovations, including credit cards, personal loans or lines of credit, or specific home renovation loans. However for a wide variety of reasons, you may want to consider a home equity line of credit as a borrowing option.
Increase in Home Value
A home equity line of credit requires you to use your house as collateral. Because of this, the amount of funds available to you is dependent on the value of your home, which is determined at a home appraisal during the application process. Depending on where you live, it’s possible that the value of your home has increased, meaning you have access to more money to put towards home improvements. Your lender will also consider your credit history and debt to income ratio when determining if you qualify for a home equity line of credit and how much you will be able to borrow.
Flexibility in Drawing Funds
When it comes to home improvements, you may not know the exact amount of money you need up front. There are often a lot of factors in play, depending on the scope of the renovations or if you need to enlist the services of more than one contractor. Plus, home improvements may include unexpected costs that you might not have been able to foresee at the beginning of the project. With so many variables, it can be hard to lock down a specific amount as you would with a traditional loan. If you come in over or under your predicted budget, you are still locked in to the same amount and interest payments.
With a Santander Bank Home Equity Line of Credit, you have more flexibility with your funds. You can easily access your line of credit as needed, up to your available credit limit, either through an online banking transfer or a check, and you can draw from the line of credit for up to 10 years. Additionally, you can reuse the line of credit as you repay it, so you continue to have access to funds, for the planned or for the unexpected.
Choosing a Home Equity Line of Credit to Finance Renovations
The recent increase in home values could help you realize your dreams, big or small. Plus, renovations and improvements may add to the value of your home, so when it does come time for you to sell you may get a better purchase price.