MortgageNOW CEO James Marchese recently discussed what you should know regarding financing a new home or deciding to remodel instead.

A home is one of the most significant purchases many Americans make in their life. He recently discussed what everyone should know about financing a new home or a home remodel.  In today’s booming real estate market, it may make more sense to remodel.

“Shopping for a new home means you’re probably searching for specific criteria,” James said. “But you need to ask yourself several questions before or while you’re looking for your dream home. These same questions can be asked if you’re looking to finance a remodel as both options have pluses and minuses.”

Jim Marchese offered several examples of questions you should ask yourself when investing in a home or remodel. First, he suggested questioning whether your credit reports are accurate and up-to-date. If not, this is a step that should begin before you start any portion of the financing process. Additionally, he suggested speaking with a financing or mortgage expert about the information you’ll need to gather before you begin the process. An expert can ensure you’re prepared with the proper documents so you don’t spend time backtracking.

“You’ll want to deeply consider what you think you can afford in terms of a monthly mortgage payment as well as the cost associated with the selling and buying a home,” James said. “This means assessing your current budget and how that change will impact your monthly cash flow.”  In addition, “the cost associated with buying and selling a home may increase the amount you need to borrow against a home, which may make it a better choice to obtain a cash-out refinance and remodel, especially at these prices.”   

James Marchese explained that this step should also be performed if you’ll be financing a remodel. Can you offset the increased loan amount with a lower interest rate or are you ready to cut your budget in other areas to accommodate payments for your remodel?

This leads to a discussion of your loan options with a mortgage expert like Jim. He explained that there are numerous places to shop for loans, such as online lenders, brokers, mortgage companies, banks, and more. A mortgage or loan expert can help you determine which option is best for your lifestyle and current financial standing. There are Federal Housing Administration loans (FHA), VA loans, USDA rural loans, conventional loans, and more. It’s important to consider all options to ensure you’re receiving the best possible rate with the lowest acquisition cost.

“It’s time to look at the costs and benefits of remodeling versus selling/buying, both will require you to look at your budget as well as residential needs,” Jim Marchese said. “You may not have known much about the impact of mortgage interest rates and closing costs before buying a home or financing a remodel, but now is the time to learn.”  Selling and purchasing a new home carries a very different cost structure than remodeling, as well as the potential differences in the interest rates. 

Jim Marchese explains that “There’s so much to learn regarding financing a home or remodel. I suggest speaking with a qualified mortgage lender about which options are available and best for your personal needs.”  In the end, your home is the most significant personal decision you will ever make, and it is worth the time and research.  Your dream home may be right around the corner, or it may be right where you’re standing.