Refinance with Rehabilitation
When existing homeowners are confronted with a substantial amount of rehabilitation work that needs to be done on their homes, a refinance/rehabilitation mortgage should be considered as an alternative to a second mortgage or home equity line of credit. Although there are many instances where a home equity loan or credit line would be a better choice than refinancing a low-interest rate first mortgage, this is not always the case. In general, this mortgage product is suitable for homeowners who have owned their homes for 10 years or more and who have built up equity in them; have existing mortgage rates that are higher than those offered on the new mortgages; have small balances on their existing first mortgages (as compared to the cost of the work that needs to be done on their homes); and cannot afford to (or do not wish to) take out second mortgages to pay for their rehabilitation work. Eligible rehab items include housing code issues, energy conservation measures, kitchen or bathroom remodeling, exterior painting, a new roof, and many other improvements that one might wish to make on one’s house.
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