How to make upgrades to your home make financial sense

This paid piece is sponsored by The First National Bank in Sioux Falls.

Marit and Charlie Moberg started their search for a home in Sioux Falls in 2016. It eventually led them to a 1954 rambler-style home. When Marit first stepped inside, she said: “Well, not this house. This is so bad.”

The interior was extremely dated and was not functional for their family of five, which included a 4-year-old and 2-year-old twins.

Charlie, on the other hand, said, “Well, should we make an offer?”

“I probably started crying, I don’t know,” Marit recalled with a laugh. “It was in kind of rough shape. We had a lot of work cut out for us.”

The two eventually decided to purchase the home and completed an extensive remodel of the inside and outside of home, as well as the addition of a two-stall garage and master suite.

“We redid everything,” Marit said. “We ripped out carpet, took off all the trim and doors, put in wainscoting/woodworking throughout the whole main level, redid the hardwood floors ourselves, obviously like paint and light fixtures and all that. We ripped out the kitchen, and so he built the cabinets.”

In addition, they also refinished the basement, re-sided, landscaped and added tons of personalized touches throughout the entire house. They financed the project with a home equity line of credit, or HELOC, from First National Bank through mortgage lender Chase Hoffman.

“We did most of it out of pocket at first until we did the addition, and then we needed the HELOC,” Marit said. “Then COVID hit, and it kind of slowed the finishing process of it, but Chase was really patient with us and just kept in touch with us.”

Once they finally were able to close it out, he helped them refinance and tie it all together into the original mortgage that’s with First National.

“We just didn’t have any stress over the financial part,” Marit said. “It gave us peace of mind that we knew we could have the funds easily available to just pay the bills as we needed.”

Take a look at the before and after! It’s amazing how these upgrades gave the house a whole new look and feel.

A look at financing options

These pictures might have you thinking it’s time for some upgrades to your home. From removing popcorn ceilings, replacing your roof or even putting in a patio, the options are endless.

What isn’t endless, though? Money to make your project happen. Luckily, most financial institutions offer a few different financing options to pick from, so you can find one that works best for you and your project. In addition, current interest rates make now a great time to borrow.

With that in mind, here are a few ways you can finance projects that will turn your house into your dream home.

Home equity loan

A home equity loan can be great for one-time financing needs. It allows you to use the equity in your home as collateral for a loan to use as you wish.

Cash-out refinancing

If you want to lower your interest rate, reduce your mortgage term, consolidate debt or take extra cash out of your home, it may make sense to refinance. The current market for refinancing is optimal. Refinancing now likely will get you a good interest rate, along with the ability to spread out payments over the life of the loan.

Home equity line of credit, HELOC

Secured by the equity in your primary residence, this revolving line of credit makes money available when you need it.

Regardless of which financing option you’re considering, do some preliminary research and estimates to make sure your application process goes smoothly. Do the research: What is your project going to cost you? Get estimates: Bring a contractor to your home to offer advice and estimates on time and cost.

All of this will help a lender make sure your goals as a homeowner are met. They’ll help you find the best option while taking into consideration the cost of your projects and your goals for repayment.

Although they’ve put a lot of “blood, sweat and tears” into their home, Marit said it was all worth it.

“It’s well worth to upgrade the home that you’re in, especially if you like the location or don’t feel like moving,” she said. “It’s a really great way to improve your home and just stay where you’re at.”

If you’re interested in making upgrades to your home, meet with one of First National’s mortgage bankers to discuss your options and see how much you can afford.