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3 Ways to Increase the Value of Your Home

Cash-Out Refinance

A cash-out refinance replaces your existing mortgage with a new loan that's greater than the amount you own on your house. After covering the remainder of your mortgage and closing costs, you receive a check to use on home improvement or other projects.

• No cost options available
• One monthly payment
• 10-to-30-year term
• Fixed interest rate
• Maximum loan amount equal to 80% of your home’s value

Cash-Out Refinance Example

Say you owe $200,000 on your $400,000 home. Using a cash out refinance, you obtain a loan for 80% of the home’s value, or $320,000 (80% of $400,000). The $200,000 you owed is paid off, putting $120,000 cash in your pocket.

Home Equity Line of Credit (HELOC)

A HELOC is like a credit card connected to your home equity. You will receive a second mortgage (called a "junior mortgage") from which you can draw to cover home improvement expenses.

• Funds can be used for any purpose
• Interest-only monthly payment
• Only pay interest on the outstanding balance on the line (similar to a credit card)
• Maximum combined loan amount equal to 90% of your home’s value

HELOC Example

Say you owe $300,000 on your $400,000 home. Using a HELOC, a second mortgage is attached to your property and you are set up with a $60,000 revolving line of credit through the following calculation:

• $400,000 home value * 90% loan max = $360,000 maximum debt allowed
• $360,000 - $300,000 owed = $60,000 HELOC

Home Improvement Line of Credit

A Home Improvement Line of Credit (HILOC) is similar to a standard construction loan. The main difference is that a HILOC is considered a second mortgage, rather than an independent loan.

• Funds must be used for home improvement
• Interest only monthly payment
• Only pay interest on the outstanding balance on the line (similar to a credit card)
• Maximum loan amount equal to 80% of your home’s future value after improvements
• Must be working with a qualified contractor

HILOC Example

Again, you owe $300,000 on your $400,000 home. You plan to add $100,000 of improvements to the home and expect the home to be worth $500,000 once completed, which the bank will verify by obtaining an “as-complete” appraisal.

Using a home improvement line of credit, a second mortgage is attached to your property and you are set up with a $100,000 home improvement line of credit through the following calculation:

• $500,000 future home value * 80% loan max = $400,000 maximum debt allowed
• $400,000 - $300,000 owed = $100,000 Home Improvement Line of Credit

Ready to level-up your place?

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