Refinancing and remodeling at the same time

• Cash-out refinance: a new, larger first mortgage, with the extra paid to you at closing
• Home equity loan: a separate fixed-rate loan, paid as a lump sum, on top of your current mortgage

A cash-out refinance makes the most sense when today's rates are close to or below your current rate. You end up with one loan and one payment, and you may lower your rate on the whole balance while you fund the project.

If your current rate is much lower than today's rates, refinancing the whole balance can cost more over time than the remodel is worth. In that case, a second loan may be the better choice.

A home equity loan lets you keep a low first-mortgage rate and borrow only what the project needs. You get a lump sum at a fixed rate, with a set payment.

CapCenter's home equity loans are fixed-rate, from $50,000 to $250,000, with 15, 20 or 30-year terms. They are available on single-family primary residences and second homes. How much you can borrow depends on the loan type and purpose, and a loan consultant can tell you yours.

Some lenders offer renovation loans, which look at what the home will be worth after the work, which can help when your current equity is limited. They come with more paperwork: detailed contractor bids, inspections and draws as the work is done. CapCenter doesn't offer renovation loans.

The best time to plan is before you apply. Knowing your budget keeps you from borrowing too little, or paying interest on more than you need.

• Get written bids from more than one licensed contractor
• Add a cushion of 10% to 20% for surprises
• Decide which projects come first if the budget is tight
• Check whether your project needs permits

Interest on money used to improve your home may be tax-deductible in some cases, but the rules are detailed. Talk with a tax professional before you count on a deduction.

CapCenter refinances and home equity loans come with ZERO Closing Costs (restrictions apply), so more of what you borrow can go toward the remodel.