How to Finance Home Improvement

With the world cup football being played in South Africa in 2010, there have been many reasons and opportunities for South Africans to finance home improvement, as many people are looking to capitalize on their chance to rent out their homes for the event. The better the facility the more rent one can charge.

Now one not only increases the long term value of ones property, but also has a sure fire way to pay of, at least a god chunk of the home improvement financing and who knows, maybe one can make a profit as well. Now this is of course of no use to anyone outside of South Africa, but there must be some sort of event you can think of that could offer a similar opportunity. For example, in London they have the Olympic Games coming up in 2012.

You see, a huge variable when it comes to making money, including renting out property, is timing. Keep looking out for that special reason to start your home improvements, and getting a home improvement loan suddenly stops being a ‘calculated risk’ and more ‘good timing’. There are suddenly more reasons on the pro side than on the con side.

Even so, do not forget to do your homework. Make sure, even though interest rates on a loan are low at the moment, consult with your loan officer about what kind of escalation you can expect and if you should fix the rate. Remember to work with you finance company as these people are your partners in this thing and it is to the advantage of both to make sure this thing goes smoothly.

Besides your loan officer, make sure you have any other necessary connections in place. For example if you were in South Africa, looking to rent out a property during the world cup, inquire at a few estate agents that specialize in home rental and are looking for properties to fulfill the demand. Make sure all your insurance is in place as well just in case the football fans you rent out to be disposed to be a little ‘overenthusiastic’ in the same example.

This way you can cover as many angles and bases as you can before you even finance home improvement []. Just bear in mind that the famous millionaires and billionaires of the past did work hard and did make their sacrifices but the thing that did eventually take them too new heights was, in the end simply luck. They were lucky enough to have the right product at the right time, so do not get too cocky, get careful a

Financing Home Improvements

Whether it’s building a swimming pool or replacing a roof on one of your rentals at some point in the future you’ll be hit with an expense right in your pocketbook. Do you finance those expenses or do you pay them out of pocket and how do you decide?

Different home owners will have different strategies for financing the inevitable. After all, if you can’t afford the maintenance on a home you can’t afford the home. But most owners will keep a cash reserve set aside to meet unexpected expenses. How much is enough?

Mortgage lenders have made a general determination of how much in reserves is prudent. This amount in reserves is a minimum of six months’ worth of mortgage payments. If the principal and interest, taxes and insurance payments are $2,000 per month then $12,000 should be enough to cover any surprises.

Obviously, this is the least expensive form of maintenance funds. The funds aren’t borrowed so there are no interest payments to a lender.

The next method of paying for home improvements or maintenance is with a home equity or home improvement loan. A home improvement loan is one loan extended to a borrower for the purposes of home improvement or maintenance. A lender will want to see a list of proposed improvements for the home and may even send out an inspector to verify the improvements have been made.

A home equity loan is not issued for a specific amount but is a credit line extended to the borrower with the house as collateral. An equity loan is much like a credit card; a borrower can use as much or as little of the credit line when needed and pay off the loan over time. This is perhaps the most convenient financing method.

Finally, funds can be pulled out when a property is refinanced. This is called a cash out refinance and funds are withdrawn to be used for other purposes while the borrower is refinancing to a lower interest rate. If a borrower is refinancing for a lower rate and needs some additional funds for a roof, air condition or other improvements, the interest rates on cash out refinance loans are better than an equity loan or home improvement loan.

If you need to finance home improvements or need funds for maintenance, remember you have choices. And if you don’t yet have a healthy reserve account, maybe it’s time to start building on