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Are you planning to renovate your home in San Diego?
It’s a smart move. The right renovations can improve your quality of life while increasing your home’s resale value at the same time.
The question is, which financing method should you use?
We created this guide to help homeowners navigate the often-complex world of financing a home renovation in San Diego, CA. We’ll explore various options along with their pros and cons.
You have a lot of different options when it comes to funding a home improvement, renovation, or remodeling project. Each has its own advantages and disadvantages. Here’s a breakdown of the most common options available to San Diego homeowners:
Paying for a renovation with cash is the simplest option. It doesn’t require you to incur any additional debt or interest payments. If you have sufficient savings, this would be the most cost-effective approach. But for a major renovation project, paying cash isn’t always an option.
A home equity loan (a.k.a., second mortgage) allows you to borrow a lump sum of money using the equity you’ve built in your home as collateral. You receive the full loan amount upfront and repay it over a fixed term, usually with fixed monthly payments at a fixed interest rate. You can use home equity loans for a renovation.
A HELOC is a revolving line of credit secured by your home equity. Unlike a home equity loan, you can draw funds as needed during a “draw period,” typically 5-10 years.
During the draw period, you’ll probably make interest-only payments. After that, you’ll enter the “repayment period.” This is when you repay the principal balance plus interest over a set term, usually 10-20 years. HELOCs typically have variable interest rates tied to a benchmark rate, which means your payments could fluctuate.
With cash-out refinancing in San Diego, homeowners can replace their existing mortgage loan with a larger one, receiving the difference in cash at closing. (Hence the term “cash-out” refinancing.)
FHA 203(k) loans in San Diego are government-backed loans that allows home buyers to purchase and renovate a home, all in one package. There are two types: the Limited 203(k) for smaller projects, and the Standard 203(k) for more extensive renovations.
San Diego homeowners can also use unsecured personal loans for smaller renovation projects. These loans don’t require collateral, like a HELOC or cash-out refi, but they typically come with higher interest rates and shorter terms.
When you renovate your home, you want to choose projects that will improve your quality of life in some way. This might mean adding a bathroom, overhauling the kitchen, or enhancing your outdoor space to enjoy that beautiful San Diego weather.
But you also want to think about resale value and return on investment (ROI). Here are some of value-adding home renovations in San Diego:
In San Diego, open-concept kitchens that flow into living or dining areas are highly desirable, creating a spacious and modern feel. Many home buyers prefer this design style. Upgrades like granite or quartz countertops and updated cabinetry are also worth considering.
Like kitchens, outdated bathrooms are a major turnoff for buyers. Renovating bathrooms with modern fixtures, updated tiling, and ample storage can significantly increase a home’s value. In San Diego, home buyers often seek spa-like showers and freestanding tubs.
Given San Diego’s fantastic climate, outdoor living spaces can improve quality of life and resale value alike. Upgraded patios, decks, and outdoor kitchens extend the living space and provide opportunities for entertaining. Drought-tolerant landscaping is a major plus as well, given the area’s water concerns.
Adding living space, whether through a room addition or an Accessory Dwelling Unit (ADU), can significantly boost a home’s value. ADUs are particularly popular in San Diego due to the potential for rental income and the ongoing housing supply shortage.
With California’s focus on sustainability and rising energy costs, energy-efficient upgrades can add resale value to any home. It will also lower your utility bills while you’re living in the home.
In conclusion, there are plenty of ways to finance a home renovation in San Diego, CA. If you’re in need of San Diego home improvement financing to cover the cost of your project, be sure to work with a lender that understands the financing options available for this purpose.
If you need financing to cover the cost of your home renovation project in San Diego, CA, we can help. Sammamish Mortgage has been helping buyers and homeowners with all sorts of financing programs. Visit our website to get an instant rate quote or call us to discuss your options or answer your questions today!
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.