Buying a new home is one of the biggest investments you can ever make. Moving to your own house, however, can be both exciting and challenging. This is because of the extra costs that come with owning a home.

When moving to a bigger house, chances are that you either do not have enough interiors and furniture or have none at all. The costs of acquiring new ones might leave you overwhelmed, leaving you wondering if you can splurge on interiors with a home mortgage loan.

Well, the truth is that you can add the cost of your interiors and furniture to your mortgage. However, is this right? Would some consequences leave you hurt financially in the future? One way of solving this is borrowing more on your mortgage.

Borrowing More on Your Mortgage

If you want to cover the costs of your new home’s interior – things such as renovations and furniture – you can borrow more on your mortgage. However, the ease with which you qualify for this depends on your down payment amount as well as your income.

Most mortgage lenders are reluctant to give mortgages to people whose payments are more than 28% of their gross income. That notwithstanding, if you are looking for a mortgage lender to finance your interiors, you can get the best solutions on loanDepot.

Those looking to add on their existing mortgages need to make sure that their payments do not go beyond the percentage discussed above. If they do, they might be forced to pay PMI (Private Mortgage Insurance). If you look at the monthly cost including the cost of PMI, it might end up being quite expensive.

That notwithstanding, those who have existing mortgages and have already started building equity for their homes can borrow more money from their mortgage to pay for their home interiors. They can do this through options such as HELOC or equity loans. These loans allow homeowners to borrow more against their home’s equity.

Is it Good to Use or Borrow More on Your Mortgage for Interiors?

The first thing to do when deciding whether you should use or borrow more on your mortgage for interiors or not is to take a look at the numbers. This is important in helping you evaluate if this financial move might end up affecting you negatively.

Adding all the mortgage costs, or all the extra costs to your mortgage will drive your monthly payments high. This means that you will be paying more, and you should make sure that you can afford this money every month.

When doing this, you also need to keep all other costs of homeownership in mind. Apart from making monthly payments for your mortgage, you will also have to deal with other bills such as homeowners insurance, property tax, maintenance, and utilities, among others. It is, therefore, important to ensure that you can take care of these bills on top of your mortgage payment.

Pros and Cons of Borrowing More on Mortgage

Of course, there are advantages to borrowing more on your mortgage for your home’s interiors. They include;
Faster Home Furnishing: If you need to take care of your interiors and furnishing fast yet you do not have the money to do that, a loan might be the only option for you.

Lower Interest Rates compared to store financing: If you want to invest in furniture, for instance, you have other financing options such as store financing. However, this option tends to have higher interest rates compared to what you get with your mortgage loan.

Debt Consolidation: Debt consolidation is very important when it comes to effective debt management. You do not have to take a different loan for your interiors when you can borrow more on your mortgage to consolidate debt.

Even though you get the enjoy the benefits discussed above, you also need to evaluate the following cons before you decide on what to do;

Chances of Paying for PMI (Private Mortgage Insurance) are High: You should make sure that you are capable of paying a down payment of 20% including the cost of the interiors. If not, then you will have to pay for insurance costs.

Larger Down Payments: Borrowing more on your mortgage to take care of your interiors will increase the down payment you are supposed to make.

Long Period Interest: Borrowing more on your mortgage might mean that you will keep paying interest for a longer period.

In conclusion, always make sure that you are making the right decision before you decide to splurge on interiors with a home mortgage loan. It can be good for some people and bad for others.