Question: I need to make some improvements to my home but can’t afford to spend any extra money right now. Do you have any suggestions?
For an answer to this question, I asked Robert Cramer of Gold Medal Mortgage for help. I like to refer my clients to him for help with financing. Here is what he suggested:
A great way to finance the cost of a home improvement project is by refinancing using the existing equity in your home. With rates at an all-time low there is a unique opportunity to finance the cost of a home improvement project while keeping the same monthly mortgage payment.
Consider this….If you have an existing first mortgage of $150,000 at 5.25% your monthly principal and interest payment on a 30 year mortgage is $828.31. If you were to refinance a new 30 year mortgage at 4% you could refinance an amount of $173,500, keep the same monthly payment of $828.31 and receive cash out of $23,500 to use towards a home improvement project.
This sounds like a good idea if you have equity and you have room to lower your rates. I hope this helps.