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Real Renovations: How to Finance a Finished Basement

When your house was originally constructed, perhaps you originally intended to get around to getting the basement finished after a few months. The concrete was installed, but the studs and joists are still showing.

Further electrical considerations may be in line as well, which could require spending a little extra money to get it all in place. Once everything is finished, you are sure your basement will be a totally cool place to hang out, watch television, and even invite friends over on the weekend for sports parties.

With a basic idea of what needs to be completed, all that is missing is to check out a few custom home builders in Toronto and to raise the capital necessary to finance the project. Here are a few ideas of how to get the financing you need to finish your basement.

finished basement
finished basement

Home Refinance Loan Option

Refinancing your preexisting home loan to finish your basement could potentially be an awesome idea. If the interest rates on your original mortgage were higher than the current rates this will provide you with the added benefit of lower mortgage payments at a lower rate.

In addition, since you are not risking any equity in your home because this is a refinance option being employed for home improvement, you will be able to write off the interest paid on a refinanced loan on your taxes.

The Second Mortgage Option

Since you already have some equity in your home, it may not be such a bad idea to attempt to obtain a second mortgage on your home. If you have a good source of regular income and can handle the additional financial burden of a second mortgage, then such a move may be an easy solution to your funding needs.

If your credit is poor and your income is below average, then a second mortgage may tend to be a bit riskier a move for your situation. Be sure to comb over your financial and credit situation thoroughly before considering this option.

Borrow Money From Your Parents

Another great way to obtain the money to finish your basement is to ask your parents or good friends for the money. Sure, no one likes to have to beg for money, but there is upside potential for this option. For starters, parents will likely not be dead set on charging you any interest.

If you are late paying them back, this will tend to not destroy your credit either. This makes borrowing money far safer a financial move than borrowing money from another lending agency.

Funding your basement finishing project may seem complicated at first, but it doesn’t mean it’s impossible. You must simply take the necessary steps and check out all your options.

Before checking with any lending agencies, be sure to pull your credit report, and fix any blemishes on your credit for best results. Before long, you should have the money you need to bring your basement to completion.

Warren Paine

Warren is the senior mortgage loan officer who has worked in mortgages and loan industry since 1995. He study in Harvard and major in Finance with a Bsc. Honor Degree. He possesses a Paralegal Certificate as well.

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