Health Articles - Three Basic Ways of Financing your House Renovation


by ABDUL VASI - Date: 2010-03-09 - Word Count: 393 Share This!

One of the biggest financial investments we generally make in our life is home renovation. But if you have proper knowledge and your financing is well structured, then you can save thousands of pennies in interest charges. You may come across numerous housing sources when it comes to financing a renovation. Hence, in order to get the best deal, let us examine three different options to see which one can prove to be the most cost effective.

The first option that any home owner can think of is by using his credit cards, which is also probably the most expensive option. Most credit cards charge about 18-30% interest which comes out to be a great sum of monthly charges when one combines the interest. This implies that if you pay only the minimum payment every month, you would never be able bring down the balance.

The second option can be an unsecured loan such as a credit or bank loan. In an unsecured loan, the bank gives you loan solely on the basis of your credit history. Due to the absence of collateral for the bank, this type of loan tends to involve a higher risk; hence the interest charges are higher. The average rate of interest charged for an unsecured loan is10% -13%.

The third alternative you can opt for is a secured loan like a secured line of credit or refinance. In a secured loan, the bank uses the equity on your home as collateral. This type of loan is less riskier, and the home owner can settle his mortgage with lower interest charges. The rate of interest charge depends on the type of secured loan you decide to go with, and a secured line of credit generally varies with the prime rate. Another alternative is 'refinance', which is the least expensive option. This is the combination of your renovation amount with the current mortgage. Through refinance one can increase one's current mortgage amount and monthly payment but can simultaneously save a loan payment and get great rates that range anywhere between 4-6%. Apparently, the most cost effective way to finance the renovation of your home is through a secured loan. For more details and information, you can visit the market and bank review too. Always try to keep yourself updated with the latest rate of interest offered by banks.


Related Tags: home, home renovation, house renovation, house extension, home renovations, house renovations, home extensions, house extensions, building renovation

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