At face value, improving your garage in any way, shape or form might not seem like a significant remodel. However, any improvement made to your house can qualify you for refinancing, and the garage is not exempt. In fact, the garage is one of the more significant features of your house. Here are the main reasons why you should consider refinancing your house after improving your garage—and how you can go about doing so.
Usually, when you remodel any part of your home, you not only enhance it aesthetically, but also in a functional sense. So, consequently the home increases in value. And the garage is no exception; indeed, the garage takes up a sizable section of your home’s exterior. By improving your garage, you can secure a better deal on your mortgage. When you hire the services of a garage door repair company, make sure you save all receipts and related information to use during the refinancing process.
Lower Interest Rates
A major incentive to refinance is to get a much lower interest rate than the one you are currently paying. Since your interest rate is directly tied to the amount you pay on your mortgage on a monthly basis, you pay less when your interest is lower. Just a few percentages lower can make a major difference in your payments. For instance, if you have a 30-year mortgage on a $300,000 loan, and you are paying a 9 percent interest on it, you would be paying around $2,414 a month. However, if you refinance the interest rate to, say, 6 percent, the monthly payment would be around $1,799 a month. That’s a reduction of almost $800 on your mortgage bill.
Adjustable Rate v. Fixed Rate
According to Houston Overhead Door, a provider of affordable garage doors in Houston, there are two types of interest rates: adjustable rate and fixed rate. If you have an adjustable-rate mortgage, or ARM, you might not like the thought of the interest rate fluctuating over time—especially if it increases and consequently increases your monthly payments. So, you might want to switch to a fixed rate to ensure a consistent payment for the duration of the loan. Another option is to refinance with another ARM that has better terms, and you can ask about the rate adjustments you might face over the course of your mortgage payments.
Adjusted Mortgage Terms
With improvements to your garage, you can also look into adjusting your mortgage term, which is usually set at 15 years or 30 years. You have two choices: increasing the term of your mortgage or shortening it. Each choice has its benefits and drawbacks. Increasing your mortgage term can stretch the amount of time for paying your mortgage, so that you can reduce your monthly payments; this option also involves making more payments—and, ultimately, more interest. On the other hand, decreasing your term reduces your total interest costs and ensures that you pay off your mortgage sooner, while increasing the amount you pay per month.
Process and Eligibility
In addition to your garage improvements, make sure that you have a satisfactory credit score and paid close attention to changes in the housing market. These factors make a huge difference in getting the very best refinancing deal possible. Also, hire someone to appraise your home and make sure you have equity; it could be difficult to refinance if you owe more on the mortgage than what your house is worth. After confirming your eligibility, discuss the available options with your bank or mortgage broker, who, in addition to the aforementioned factors, would also consider your income and assets, debts, current value of your house, and the amount you wish to borrow.
This article was contributed on behalf of Houston Overhead Door, your number one choice when looking for help with repairing your garage door. Check out their website today and see how they can help you!