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Saturday, March 5, 2011

Financial Options

JH Basement Finish Company
Financial Strategies
      These are tough economic times, the stock market is volatile, IRA’s are in jeopardy and we have seen the equity in home values drop.  The question becomes is this the right time to make a major investment in your home?  The answer is yes!  According to market experts within 12 months we will not only see the values of homes return but a single family home remains the major contributing factor to long-term individual wealth.        
Money has and will always be safer in real estate than in any other area of investment.  As a bonus, the cost of finishing your basement has declined during the past months but will rise substantially as the financial crisis is resolved.  So, even though this decision needs to be considered carefully - now is the right time for such an investment.  There are several fiscally sound options to obtaining the initial capital required. 
Refinance of Existing First Mortgage:    Mortgage rates are low, possibly lower than when your home was originally purchased.  By refinancing your existing mortgage, it is feasible that your payment will be lower than it is currently.  Also, since this money is being invested directly back into your home, no equity is lost.  This is also a viable alternative because the interest on this loan is then tax deductible.  This is a sound financial choice.
      We can provide you with contacts at several mortgage companies and although we cannot endorse any one in particular, we have had success with all of them.  
Second Mortgage:    This is a popular alternative to homeowners.  There are a couple of different ways to obtain a second mortgage.  You can apply for an open-ended equity loan.  With this loan you will pay interest only on the amount you have borrowed to that point.  You can also obtain a fixed second mortgaged based on the current value of your home.  We can provide you with contacts for this type of loan as well. 
Debt Consolidation Loan:     This loan can consolidate other higher interest debts such as credit cards and open lines of credit with the money needed for the basement finish for a new lower interest loan.  The monthly payment on the consolidation loan, including the money needed to finish your basement, is generally equal to the combination of the individual debts.  This is a great selection if you would like to consolidate at the same time you finish your basement, and are concerned with higher monthly payments.
Rental Property Income Loan:    Most importantly, do not forget that your basement is now an asset.  Recent studies have shown that a one-bedroom basement apartment will rent for between $1,200.00 - $1,400.00 per month.  Even considering a loan of $40,000.00 with payments of approximately $400.00 a month, it is feasible that you will show a net profit of approximately $800.00 to $1,000.00 per month beginning directly after the basement is finished.  Many clients have renters lined up before the basement construction is complete.  With no initial investment, this is a great way to increase your monthly income.

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