Page 41 - Inspire Health March/April 2015
P. 41
Spring fix: How to pay for a home
SPRING FIX:improvement
HOW TO PAY FOR A HOME IMPROVEMENT
S By: Linda Doell, Editor
pring is a season for new beginnings and if you’re like a lot of
homeowners, you’re looking around your house and planning
ways to spruce it up after a long winter.
According to the 2011 American Housing Survey from the U.S.
Census Bureau and the Department of Housing and Urban
Development, homeowners spent $359 billion on home improvements
between 2009 and 2011.
Some of the biggest – and most expensive -- projects were roofing
work and kitchen remodels. Heating and air conditioning projects, as well
as flooring, paneling and ceiling work were also among the most popular
projects.
But how to pay for the projects?There are a number of ways to fund
home improvement projects, says Diane M. Cunningham, senior vice
president of Embassy Bank for the LehighValley.
The three most common funding methods are a home equity term
loan, a home equity line of credit or a cash-out mortgage refinance.
For the home-equity term loan, the length of the loan is usually
5, 10 or 15 years.“The shorter your term, the lower your interest rate,”
Cunningham says.These types of loans are typically taken out for smaller
dollar amounts.
“Like an auto loan, a home equity term loan features a fixed interest
rate and set monthly payment. You borrow once and pay down the loan
until it is satisfied,” she says.
Homeowners looking to complete a project over a longer period of
time may be better served by a home equity line of credit, which allows
them to borrow what they need when they need it, pay it down and
then borrow again if additional work is required to complete the home
improvements.
“Rather than charging the costs of a project on a credit card, a home
equity credit line gives you the same type of availability to the cash you
need, only at a much lower interest rate” Cunningham says.“It’s always out
there waiting for you. On a home equity term loan, you decide how much
money you want to borrow upfront, but with a line of credit you can
borrow as little or as much of your credit line as you like at any given time.”
The line of credit typically comes with a variable interest rate, although
lenders may periodically offer specials where the rate is fixed for a limited
time.
“At Embassy Bank, both the home equity term loan and the line of
credit have no upfront costs, prepayment penalties or early termination
fees,” Cunningham says.
Another option to pay for a home improvement project is through a
mortgage refinance. Rates are still at historic lows, so this is a great time for
homeowners to consider refinancing their current mortgages to get some
cash out for those dream projects, home repairs or to simply lower the
rate on their current mortgage.
“We don’t sell any of our mortgages and have a simple, local approval
process,” she says.“Something to consider with a mortgage refinance is
that you will have some fees, but with an Uncommon Mortgage from
Embassy, you can still save thousands with very low closing costs and a
biweekly payment option”
Embassy Bank for the LehighValley has seven locations through both
Lehigh and Northampton counties.
March § April 2015 INSPIRE HEALTH 41
SPRING FIX:improvement
HOW TO PAY FOR A HOME IMPROVEMENT
S By: Linda Doell, Editor
pring is a season for new beginnings and if you’re like a lot of
homeowners, you’re looking around your house and planning
ways to spruce it up after a long winter.
According to the 2011 American Housing Survey from the U.S.
Census Bureau and the Department of Housing and Urban
Development, homeowners spent $359 billion on home improvements
between 2009 and 2011.
Some of the biggest – and most expensive -- projects were roofing
work and kitchen remodels. Heating and air conditioning projects, as well
as flooring, paneling and ceiling work were also among the most popular
projects.
But how to pay for the projects?There are a number of ways to fund
home improvement projects, says Diane M. Cunningham, senior vice
president of Embassy Bank for the LehighValley.
The three most common funding methods are a home equity term
loan, a home equity line of credit or a cash-out mortgage refinance.
For the home-equity term loan, the length of the loan is usually
5, 10 or 15 years.“The shorter your term, the lower your interest rate,”
Cunningham says.These types of loans are typically taken out for smaller
dollar amounts.
“Like an auto loan, a home equity term loan features a fixed interest
rate and set monthly payment. You borrow once and pay down the loan
until it is satisfied,” she says.
Homeowners looking to complete a project over a longer period of
time may be better served by a home equity line of credit, which allows
them to borrow what they need when they need it, pay it down and
then borrow again if additional work is required to complete the home
improvements.
“Rather than charging the costs of a project on a credit card, a home
equity credit line gives you the same type of availability to the cash you
need, only at a much lower interest rate” Cunningham says.“It’s always out
there waiting for you. On a home equity term loan, you decide how much
money you want to borrow upfront, but with a line of credit you can
borrow as little or as much of your credit line as you like at any given time.”
The line of credit typically comes with a variable interest rate, although
lenders may periodically offer specials where the rate is fixed for a limited
time.
“At Embassy Bank, both the home equity term loan and the line of
credit have no upfront costs, prepayment penalties or early termination
fees,” Cunningham says.
Another option to pay for a home improvement project is through a
mortgage refinance. Rates are still at historic lows, so this is a great time for
homeowners to consider refinancing their current mortgages to get some
cash out for those dream projects, home repairs or to simply lower the
rate on their current mortgage.
“We don’t sell any of our mortgages and have a simple, local approval
process,” she says.“Something to consider with a mortgage refinance is
that you will have some fees, but with an Uncommon Mortgage from
Embassy, you can still save thousands with very low closing costs and a
biweekly payment option”
Embassy Bank for the LehighValley has seven locations through both
Lehigh and Northampton counties.
March § April 2015 INSPIRE HEALTH 41
