Refinance for Renovations

Most people do some sort of renovation on their home every 10-15 years. For 2020, a lot of people decided to make it the year to get that ball rolling. After being stuck inside our homes for so long due to shutdowns, stay-at-home orders and necessary quarantines caused by the COVID-19 Global Pandemic, many people are ready to make their home space work more efficiently. 

Home renovations come with a cost however. Most renovations can cost anywhere from $5,000 to $50,000, which is a staggering amount of money for most people to just have on hand. Sometimes people can take out loans for home improvements, but there is another very common solution: refinancing for renovations

In the past, a lot of people opted to buy a new house and move instead of renovating, but with fewer houses on the market, more and more people are opting to spruce up their current home and add necessary things like an in-home office. Investing in your current home has significant upsides compared to purchasing a new one.  As you re-feather the nest, you’re also adding value to your home and increasing the equity. 

What is Refinancing?

Refinancing a mortgage is the process of taking your current mortgage loan and effectively selling it to another lender under different terms. Changing your interest rate or reducing the fees on the loan has the potential to save you thousands of dollars across the lifetime of your loan. Refinancing your home changes the terms, but does not remove the balance on the loan, if you want to refinance to fund a home improvement project, you’ll most likely be increasing that overall balance. 

This is called a cash-out refinance

Cash-Out Refinance for Home Improvement 

If you want to refinance and walk away with cash in hand, you’ll need to refinance  the current mortgage with one that is both less than what the house is projected to be worth, but more than you currently owe on it. 

For example, if your home is worth $100,000 and you only have a remaining balance of $60,000, and you wanted to do a $10,000 reno, you’d likely refinance your home for a loan somewhere between $70-$75,000. The $60,000 would go to paying off the balance on the old loan, and the remaining difference would be paid out to you and cover the closing costs. 

This money is considered tax-free, and is just folded into your new mortgage. 

One of the key benefits to financing your renovation with a cash-out refinance is that it doesn’t add another monthly payment to your budget. You still just have the one mortgage payment to worry about and try to balance instead of juggling the home improvement loan payment on top of it. Your new mortgage payment could just as easily be higher or lower depending on what you decide to do. But it’s still not a new payment. Which is a huge plus in its favor. 

Historically Low Interest Rates

As it stands today in December 2020, mortgage interest rates are historically low! Refinancing for a lower interest rate can also lower your monthly mortgage payments. Having a few extra dollars in your account every month could help you save up for that renovation project you’ve been dreaming of. 

Questions? 

If you have any questions, don’t hesitate to reach out!  Give us a call! Frank B. Pallotta Law looks forward to helping our clients in Metro Atlanta navigate the closing processes associated with refinancing your home. Reach out to us with your questions. We’re here to help.

End-of-Year Estate Plan Check Up

The end of the year is fast approaching, and so many of us are doing our best to tie up our loose ends for 2020 and move into 2021 with a clean slate. All of us at Frank B. Pallotta Law have been working to do the same, which got us thinking about end-of-the-year estate plans! 

The end of the year is the perfect time for reflection, rearrangement, and readjustment for plans. As you take stock of your life, and organize your world, make sure you’re going into the new year with all your important paperwork in order too. Specifically, ask yourself, “Have I done a check up on my estate plan this year?” 

What is an estate plan? 

Briefly, estate planning is the process of legally declaring what happens to your estate after death. It establishes what you wish to do with your tangible and intangible assets, as well as establishing any trusts, charitable donations, taxes, and funeral plans. 

Why do an estate plan check-up?

It’s deeply important to revisit your estate plan at the end of every year, or at least once a year. A lot in your life can change over the course of a year. Assets can change, either by adding more or selling some off, trading. Not only that, potential beneficiaries can change drastically, marriages, divorce, adoptions, pregnancy and births, all change not only the dynamic of a family but the number of people considered when making the estate plan. A brief check up once a year can keep you and your family firmly on track when the plan needs utilized. 

What will an estate plan check-up cover?

That will really depend on what has changed in your estate. If nothing changed for you this year, very little will happen other than to ensure everything is filed and labeled correctly. But if you had a great many life events and alterations, that may result in a complete overhaul of your estate plan. 

  • Assent inventory
    • Go over your assets, both the tangible (house or land, car, personal possessions, etc.) and the intangible (checking accounts, savings, retirement funds, trusts, etc.) and note down anything that would have changed in the last year, or since you last gave your estate plan a check-up. 
  • Double check your deed! 
    • A surprising number of people think they understand and know what’s on their deed, and a surprising number of them are wrong.
  • Consider Family Needs
    • How much has your family’s needs changed this year? Have you had children, grandchildren, gotten married, or divorced? If any of that has changed since your last estate plan check up, make sure you’re updating your plan in consideration. 
  • Ensure everyone is set up properly
    • In the same vein as evaluating your family’s needs, make sure everyone is set up correctly. Do you own property with your partner/spouse? Make sure that you’re set up accurately as “Joint Tenants with the right of survivorship” and have a valid will that expresses as much.
  • Financial Powers of Attorney 
    • This is the perfect opportunity to make sure this is spelled out crystal clear. Decide and define who is making decisions when the time comes.

As morbid as it is, it’s important to ensure that your wishes are as spelled out as clear as they can be and secured legally. Don’t assume that word of mouth is secure enough if the worst happens and something goes to court. 

Questions? 

If you have any questions, please don’t hesitate to reach out! At Frank B. Pallotta Law we are licensed Georgia Real Estate Lawyers with more than 20 years of experience. When it comes to your estate plan we can help you figure out if you need a new deed, POA or if you need an estate planning specialist. Reach out to us with your questions. We’re here to help.