Before You Move: Consider a Florida Home Equity Loan for Renovations

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Before you begin the process of finding a new house, perhaps you haven’t thought long enough about renovating your current residence? A Florida home equity loan can make this easier than you may have imagined.

If you aren’t sure about which direction to head in, consider a few factors. First, can your home can be adjusted to meet your needs?

Is your property big enough for an addition? Will your foundation handle the weight of an extra floor? Plan out the changes you would make, and don’t jump into major renovations until you know they are feasible. Ask a professional renovator for an opinion.

Assuming the renovations are doable, think about the tangible and intangible costs of renovating compared to buying a new home, going through the Florida home loan process - and then actually moving.

Financial costs to consider …

Whether you take out a new mortgage or a Florida home equity loan, you’ll face closing costs that include fees for appraisals, credit reports and title insurance. Remember this, in order to determine an estimate of these fees: they’re typically two to six percent of your Florida home mortgage loan. A home equity loan, however, is likely to be smaller than a new mortgage, so the closing costs will probably be lower.

If you’re thinking of selling your home and buying a new one, you’ll also pay real estate commissions and seller’s closing costs, which together can total as much as 10 percent of the sale price of your home. You must also factor in your moving costs, which can amount to several thousand dollars. There’s a lot to pay for.

For tax purposes, you usually can deduct your interest payments on both standard Florida home loans and home equity loans used for substantial improvements. Overall, renovating is likely to be less expensive than moving up to a bigger house - but, of course, you may just be interested in a change of location.

If that’s the case, good luck! Let us know if we can help.