West Warwick is proud of its milling heritage. Centuries ago, this was a thriving mill town and is undergoing an amazing transformation that is sure to brighten the future of West Warwick and all of its residents. In fact, there are several major developments that are turning old, abandoned milling areas into residential housing districts. Current market movements have made homes in these areas a premium, and they are being snatched up in droves.
Current residents of West Warwick, Rhode Island are not exempt. Because of the town’s rehabilitation efforts, the value of its homes is guaranteed to increase. One may ask, “How can I maximize the value of my current or soon to be home?” There are two very simple answers based on your current situation. Let’s discuss them both.
A construction loan is basically a loan where the lender will give you access to a certain amount of money for the planned construction of a home. The amount that you qualify for will be based on your credit score and monthly income. Construction loans are different from standard 15 to 30-year mortgages. First, construction loans don’t qualify under special loan programs. In most cases, a borrower will make monthly mortgage payments on the loan amount. These are interest-only payments. Once construction is completed and the house has been certified for occupancy, the loan becomes due. Unlike a fixed rate mortgage, the interest rate on a construction loan is variable.
Contrary to popular belief, you do not have immediate access to the entire loan amount. Your lender will expect you to come up with a schedule. This schedule will show each phase of construction and the funds disbursed to date. Your monthly interest payment is based on each phase.
Since a construction loan becomes due upon completion of the home, you will want to convert that loan into permanent financing. Here, the construction loan becomes a standard 15 to 30-year mortgage. As long as you set up the loan as a construction to permanent loan, there is only one application required. This means that you do not have to pay the same kind of fees that you would if you were going to refinance the loan. A refinance is most beneficial when going from a first mortgage to another first mortgage. Usually this is to get lower interest rates and better terms.
Home equity loans come in many forms. One version of the home equity loan is the cash-out refinance loan. Once you close on this type of loan, you are issued a lump payment in the amount of equity that you have in the home. Since you live in a market that is increasing in value, you should consider using this equity to invest in other local properties or to make improvements on your home.
More people are familiar with the standard home equity loan. With this loan, you are borrowing on the difference between your current loan balance and the value of your home. There are many ways that you can use your home equity loan. In most cases, people choose to complete some of the projects around the house that they never had the budget for. A cash-out refinance loan is similar to a home equity loan.
One way to truly benefit is to use the equity to pay off all of your credit cards. As long as you don’t run the balances back up, this will strengthen your credit score and make it easier for you to get prime interest rates when you apply for financing.
West Warwick, Rhode Island is one of the few areas that offer a perfect opportunity for those willing to invest in its future. If you would like a professional to contact you about the financing options available to you, please submit the form below.
