Your Old Kitchen Needs a Makeover: Refinance and Remodel
Old cabinets. Ugly counters. Scuffed floor. Ancient appliances. Sound familiar? Maybe your kitchen needs a makeover. But the question is: How much does a kitchen remodel cost? And how do I pay for it? One option you may be shying away from is the refinance and remodel route.
The process is pretty straightforward. You refinance your home into an FHA 203k home improvement loan. By planning the remodeling projects and budget, you'll end up with an overall loan amount that includes all the work - done by professional contractors. Once it's all closed and the work is underway, you only pay one mortgage payment. The cost is amortized into your mortgage.
This way you're not paying a home equity line of credit off in 5 years - instead of a second mortgage that needs to be paid off quickly you're paying a new mortgage with the value rolled into on loan.
For every $1,000 in work you finance, you'll add about $6 a month to your house payment. So a $20,000 kitchen remodel makeover would add about $120 to your monthly mortgage payment. That's a pretty reasonable option for many homeowners, especially when you consider how much kitchen you could get for $20,000.
With the refinance and remodel choice you could pay for new appliances, new flooring, replacement cabinets and counter tops, painting, plumbing and electrical work. All of this work is eligible for 203k financing. The only work not covered is structural (if you go with the 203k Streamline - the Full 203k does cover structural improvements) or luxury items. In other words you couldn't pay for an outdoor barbecue pit or a hot tub in the middle of your kitchen.
Want to learn more about home improvement loans and how they can help you spruce up your home this summer? Download our most recent eBook, "The Complete Guide to Spring Home Improvement Financing." This guide covers do-it-yourself projects to help upgrade the look of your home, plus several in-depth remodeling ideas.
(old kitchen: Flickr user fishpickdiver)