Weighing the Benefits of a New Home Purchase or a Home Remodel: What You Need to Consider

By Sheryl Landrum
Home Worth Columnist

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Does your home seem outdated? Have you outgrown your home and think it is time to relocate but dread leaving your neighborhood, low property tax base, and the place you and your family call home? Maybe you should use the equity in your existing home and get a home mortgage refinance or a home equity line instead. These options will give you your dream home without the need to change your address.

Refinancing a Home

Many people refinance their homes and draw extra cash for home improvements and additions. Often they can also reduce their mortgage interest rate. The extra cash allows them to improve and increase their home's value while better personalizing it to meet their family's needs. While a new first mortgage still has lender, escrow, title, appraisal, and other fees, first mortgages have lower interest rates than second mortgages or home equity lines of credit.

Home Equity Lines of Credit

No cost home equity lines of credit are becoming very popular today and result in extra cash with little or no cost to the borrower. While at a higher interest rate than a first mortgage, the interest only payments, the ability to draw money out as needed, and the flexibility of paying it down when you want is a huge draw. Home equity lines are also preferred when a borrower has a great rate on his first mortgage that he wants to keep. As an added bonus, both the refinance option and the home equity line of credit create no increases in property tax.

So, what are you waiting for! With options like these, call your local lender and begin work on creating your dream home.

About the Author
Sheryl Landrum is a Senior Loan Officer with First Capital Mortgage of San Diego at the Prudential Realty Office in Bonsall, California.