Yes, it’s possible to borrow extra on your mortgage for furniture. However, not all lenders allow you to borrow extra for furniture, and in case your lender allows it then you have to be eligible for it according to your lender’s policy.
Thinking of taking a mortgage but not sure whether you can borrow extra for furniture on your mortgage or not?
Well, the answer is positive and but it depends. So, it can be quite confusing. However, don’t worry. Because as a financial advisor I am going to explain it to you in detail.
In this article I am going to simply explain, can I borrow extra on my mortgage for furniture? If so then how, the requirements, what are the advantages and disadvantages of it along with all the related queries. So, stick here till the end.
First, let’s start by answering can you borrow extra on your mortgage for furniture.
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Can I Borrow Extra On My Mortgage For Furniture?
Yes, you can borrow extra on your mortgage for furniture. However, it depends on your lender’s policy. Most lenders allow it but some don’t.
Though most lenders allow borrowing extra on my mortgage for furniture but it has its own perils. I’ll discuss it in the later part. For now, if you need extra for furniture then ask your lender whether they allow you to borrow extra on your mortgage.
Moving into your own home is one breathtaking experience. But there come many extra costs with moving. One of them is furniture and they can be pretty expensive. So, many people think of borrowing extra with their mortgage for furniture.
However, if your lender has a policy of lending extra then you must be eligible for it. Different lenders have different policies regarding eligibility. So, before borrowing extra on your mortgage for furniture, you have to fully understand your lender’s policy regarding this.
But what about appliances. Can you include new appliances in a mortgage too?
Let’s find out.
Can You Include New Appliances In A Mortgage?
Well, the answer is both yes and no. To get extra on your mortgage for appliances you have to meet the requirements of your lender. If you meet the requirements then you can get extra. Otherwise, you can’t get extra for appliances.
Like furniture, home appliances are a must need for a new home. But financing them can be hard. So, including them inside your mortgage might be a good idea. However, it’s not always possible to get extra for appliances.
As a result, there can be other ways for financing your appliances like a credit card, no-interest financing from vendors, home equity loans, paying less in downpayment, etc.
Now let’s learn whether you can borrow extra on your mortgage for renovations.
Can I Borrow Extra On My Mortgage For Renovations?
Yes, like furniture and appliances you can borrow extra for renovations on your mortgage. As renovation costs can be higher than furniture and appliances so you might need to borrow a mortgage plan with extra funds for renovations.
There are also other ways to finance your renovation costs such as
- Cash-Out Mortgage Refinancing
- An FHA 203(k) loan
- A HomeStyle loan
- Home Equity loan
- Personal or Credit Card loans
So, you can borrow extra on your mortgage for furniture, appliances, and renovation. But as we have mentioned before there are some eligibility requirements for these. But what are they?
Requirements For Borrowing Extra On Your Mortgage For Furniture
To borrow extra on your mortgage for furniture you must meet your lender’s requirement policy for this. So, apart from meeting the mortgage requirements, you have to qualify for some extra requirements to borrow extra for furniture.
Though these policies vary from lender to lender. But some basic policies remain the same. They are
- A good credit score is a must for borrowing extra on your mortgage.
- The extra money you borrow will increase the monthly payment of your mortgage. But to be eligible the monthly payment must be 28% or less than your take-home income. Otherwise, your lender might not allow you to borrow extra.
- The extra money you borrow will increase your total mortgage. So, you must put 20% or more downpayment on your house. Otherwise, you have to add a PMI to be eligible for extra borrowing.
These are some basic requirements. There can be more depending on your lender. So, talk to your mortgage company in detail for understanding the requirements.
But how soon you can start shopping for your furniture?
How Soon After Closing Can I Buy Furniture?
You should wait until your loan is funded, the documents are recorded and you are handed over the keys. After that, you should start buying your furniture.
Because different states have different laws regarding this. In some states, it is possible that your loan officer can cancel the funding even after closing the loan. So, you better not risk it.
Buying new furniture for your home can be exciting. But until you are funded and get your home keys, you should wait even if you get extra on your mortgage for furniture.
Now, it’s time to look at the advantages and disadvantages of borrowing extra on your mortgage for furniture.
Advantages And Disadvantages Of Borrowing Extra On Mortgage For Furniture
Like any other loan, borrowing extra on a mortgage for furniture comes with its perks and perils. Let’s have a look at them.
Advantages
- Mortgages are low-interest rate loans. As a result, the money you borrow for furniture on your mortgage will have less interest compared to other financing methods.
- You will have more time to pay the money you borrow for furniture compared to credit card debts and personal loans.
- The money, you borrow for furniture is linked to your mortgage. So, it will be easy for you to keep track of and manage the debt.
- You will be able to furnish your home faster and your home value will also increase after furnishing and renovating it.
Disadvantages
- You might get a low-interest rate loan for your furniture but you have to repay the debt over the course of 20-30 years. So, you might end up paying more.
- You have to put in a large down payment to be eligible for borrowing extra for furniture.
- If anyhow your leftover money from a home loan for furniture is not used within 6 months, your credit score will go down.
- You might have to purchase a PMI to be eligible for borrowing extra and it can cost you more than other furniture financing options in total.
These are some of the pros and cons of borrowing extra for furniture on your mortgage.
Now let’s assume you have managed to borrow extra on your mortgage but some of the money you borrow remains unused. Then what happens?
What Happens To The Leftover Money From Home Loan?
If you manage to get extra on your mortgage and the money remains unused for 6 months or longer then you might face some serious consequences. Some of them are
- You might have to pay extra interest for the unused funds from your mortgage.
- Your credit score will be hurt and your ability to borrow money will go down with it.
- You have to pay extra fees for the extra money you borrowed and haven’t used in 6 months.
You don’t want to face these consequences. So, when you borrow extra for furniture or any other thing on your mortgage make sure you are not borrowing too extra. Moreover, spend the money on furniture right after your loan is funded and you get your home keys.
By this time we have found that you can borrow extra on your mortgage for furniture. But what are the other ways to finance your furniture for your new home?
What Are The Best Way To Finance Furniture?
Apart from borrowing extra on your mortgage for furniture, there are a few other ways to finance the furniture of your new home. Some of the best way to finance furniture
1. In-Store Financing
Some furniture manufacturers and sellers provide in-store financing for furniture. Though the interest rate might be high in some places. However, it’s possible to find sellers who offer no interest rate borrowing.
So, look for stores that will finance your furniture without any interest in the money you borrow.
2. Home Equity Loan
If you have good equity in your house then you can apply for a home equity loan or line of credit to finance your furniture.
However, if you try this method then you can not buy your furniture instantly after you move in. Because building home equity takes time.
3. Credit Card
Using credit cards can be another solution for financing your furniture. It will both build up your credit and let you buy furniture after you move in.
However, it’s a good idea only if you have a good income and can pay the debt and credit card fees within time. Because credit card fees and interest rates are pretty high.
4. Save Up and Purchase
It is the best way to purchase furniture. Because debts are never good. So, saving up for furniture and buying it might be the best possible solution for purchasing furniture.
5. Look For First-Time Home Buyer Furniture Assistance
Many states have a furniture assistance program for low-income families. Moreover, there are some first-time home buyer furniture assistance programs too.
Find out if your states have these and apply if you are eligible. Because these assistance programs have lower interest rates than any of the methods above.
6. Home Furniture Loan
You can also take a home furniture loan to purchase new furniture for your house.
But they might have high-interest rates. So, choose your home furniture loan plan carefully.
7. Personal Loans
Lastly, you can take personal loans to finance furniture for your new home. However, please check the loan policies before borrowing. Otherwise, you might end up in bad debt.
These are some of the best ways to finance furniture for your new house.
By now we have looked at all the options for borrowing money for furniture and got the answer of can I borrow extra on my mortgage for furniture? So, what should you do?
Should You Borrow Extra On Your Mortgage For Furniture?
The answer is much more complicated than a simple yes or no and it completely depends on you.
We have already looked at the pros and cons of it along with all the other options. So, now it’s time for you to calculate the cost and find out whether it would be a good choice for you in the long term.
Because if you borrow extra on your mortgage for furniture then you have to repay for almost 20-30 years. So, if you find a cheaper option then avoiding it would be better for you in the long term.
Moreover, homeownership comes with a lot of responsibilities and costs like property tax, insurance, maintenance cost, utility bills, etc. So, you have to be careful while taking extra debt.
From my perspective saving up and purchasing the furniture would be a better option. It might be slow but it’s good for you in the long term. As debt is never good.
By now we have found the answer to Can I Borrow Extra On My Mortgage For Furniture? Now, let’s look at some of the relevant queries.
FAQs
Here are some of the frequently asked questions related to this topic.
Can You Borrow More Than Asking Price on a House to Pay off Debt?
No, you cannot borrow more than the asking price on a house to pay off debt. Lenders will not lend you more money than the appraised value of the home. This is because the home is the collateral for the loan, and the lender wants to make sure that they will be able to recoup their money if you default.
In case, you have debt that you need to pay off, you can use the equity in your home and take a loan. However, first, you need to gain enough equity by paying your mortgage to qualify for these loans and meet the lender’s requirements.
Can I Use Mortgage Loan for Furniture?
No, you can not use a mortgage loan to purchase furniture directly. A mortgage loan can only be used to purchase a home, and the lender will only lend you money up to the appraised value of the home. However, you might be able to convince your lender to borrow extra for furniture if your finances are good enough.
Is 50% of Income too Much for Mortgage?
Yes, 50% of income is too much for a mortgage. It is recommended to spend no more than 30% of your take-home pay on your mortgage payment. This leaves you with 70% of your income to cover other essential expenses, such as food, transportation, utilities, debt payments, and savings.
In Summary
Borrowing extra for furniture might seem like a good idea and many mortgage lenders allow it. However, remember no debt is good debt. So, if you want to borrow extra please do an in-depth analysis and find out whether it will be a good decision in the long term.
Lastly, taking a mortgage is a big financial step and it can be quite complicated. So, if you don’t have a good understanding of mortgages, it’s suggested to consult with a financial advisor or mortgage advisor.
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