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MORTGAGE KNOWLEDGE CENTER

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HELOC LOANS

Rates starting at % (APR %)¹

 

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1. Discover you’re eligible to become a PenFed member

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  1. Home
  2. Mortgage Knowledge Center
  3. Building the Perfect Outdoor Kitchen – Using Your Home's Equity

MORTGAGE

Building the Perfect Outdoor Kitchen – Using Your Home's Equity

What You'll Learn: Design factors, costs, ROI, and financing options when adding an outdoor kitchen

EXPECTED READ TIME:4 minutes

August 10, 2023

Building the Perfect Outdoor Kitchen – Using Your Home's Equity

Imagine stepping out into your backyard, surrounded by the aroma of sizzling steaks and the laughter of friends and family. Creating the perfect outdoor kitchen and entertainment area is a dream for many homeowners. And the good news is that you can use the equity in your home to make it a reality. In this article, we'll explore the exciting possibilities of building an outdoor kitchen using a home equity line of credit (HELOC) while providing you with useful information and inspiring ideas. Let's start cookin’!

Taking indoors outdoors

The perfect outdoor kitchen begins with a look at your indoor kitchen. Ideally, your outdoor dining and entertainment space will make the most of the exterior area while flowing seamlessly from the home itself. Aim for a spot that’s easily accessible from the door closest to your kitchen, both for ease of access and aesthetics. If you’re making upgrades to a current patio area, this may already be done; if you’re starting from scratch, now is the time to earmark your budget for any architectural edits you may want, like a new entryway or breezeway between the house and garden. 

Appliances set the tone

Outdoor cooking appliances are having a moment. From stunning outdoor grills to the adorable powerhouse, the Green Egg (aka avocado), there’s something for every culinary taste. While it may be tempting to have it all, it’s important to consider how you plan to use your outdoor space, its size and location, and your tastes and lifestyle. Just a few contenders:

  • Grill: A high-quality grill is the heart of any outdoor kitchen. Look for durable options with versatile cooking features to suit your culinary aspirations.
  • Green Egg: These ceramic charcoal grills offer exceptional heat retention and provide a unique cooking experience, perfect for searing, smoking, and slow-cooking delicious meals.
  • Gas Heater: Extend the usability of your outdoor kitchen into cooler seasons with a gas heater, keeping you and your guests comfortable.
  • Smoker: For those who enjoy the rich flavors of smoked meats and fish, a smoker is a must-have addition to your outdoor kitchen.
  • Pizza Oven: Impress your guests with mouthwatering, wood-fired pizzas made right in your own backyard.
  • Refrigerator: Keep your drinks cool and your ingredients fresh with a compact outdoor refrigerator.

Any of these, alone or in combination, will come with their own needs for energy supply, maintenance, storage, and design within your space. For example, a smoker might not play well next to your back door, or close to a seating area. On the other hand, a brick pizza oven can become the centerpiece of an all-new outdoor entertaining area. Mangia!

Remember to plan for the back end

To ensure your outdoor kitchen functions seamlessly, make sure your electric and gas lines, as well as any ventilation, paving and patio, or roofing concerns are handled before you install new appliances. If you're incorporating a grill, heater, or other gas-powered appliances, you may need to have a gas line installed to provide a steady fuel source. Also consider the electrical needs of your outdoor kitchen, such as lighting, appliances, and entertainment systems. You may need to upgrade your electrical panel or install additional outlets to accommodate these requirements. You’ll also want to make sure your outdoor flooring and any walls or roofing can adequately support and protect your furnishings and your guests.

Can you do it yourself?

Whether you tackle the project yourself or hire a contractor depends on your skill level, available time, and budget. While a DIY approach can be rewarding, hiring a professional ensures expertise, efficient installation, and compliance with local building codes. Plus, there are some things that only a professional should handle, like installing gas lines or complicated electrical wiring.

What’s the cost – and the payoff?

The cost of building a backyard entertainment area can vary widely depending on your preferences, materials, and scale of the project. Here's a breakdown of different cost ranges:

  • Low-End: A basic outdoor kitchen setup with a grill, countertop, and storage can start around $5,000 to $10,000.
  • Mid-Range: As you add more features like a smoker, pizza oven, or refrigerator, costs can range from $10,000 to $20,000.
  • Dream Outdoor Kitchen: For those seeking a more posh backyard dining experience with high-end appliances, custom cabinetry, and premium materials, the costs can exceed $20,000.

The days of setting up a grill and a dining set on the pool deck and calling it outdoor dining are long gone. Today, an outdoor kitchen is not only a must for many homeowners, but is also a huge draw when it comes time to sell. As outdoor living spaces continue to grow in popularity, potential homebuyers are increasingly drawn to properties that offer functional and stylish outdoor entertainment areas. By creating a well-designed and appealing outdoor kitchen, you not only enhance your own enjoyment, but also potentially attract buyers and increase your home's overall value.

Leveraging a HELOC for your outdoor kitchen

Now, let's explore how you can use your home's equity to finance your backyard entertainment idea. A home equity line of credit (HELOC) allows you to tap into the equity you've built in your home and use it as a revolving credit line for various expenses. By accessing funds through a HELOC, you can benefit from potential tax deductions and potentially increase the value of your home.

Additionally, a HELOC may offer potential tax benefits. While it's essential to consult with a tax professional to understand the specific deductions available in your situation, the interest paid on a HELOC used for home improvement purposes may be tax-deductible. This can help offset some of the costs associated with building your outdoor kitchen.

Outdoor kitchen dreams – realized

Building the perfect backyard entertainment area using your home's equity is an exciting endeavor that can transform your backyard into a culinary oasis. With the right products, thoughtful planning, and financing options, you can create an outdoor space that enhances your lifestyle, adds value to your home, and brings joy to your gatherings.

And when you strategically tap into your home’s equity, that dream outdoor kitchen is within reach.

 

For more information about PenFed Mortgages:
 

PenFed Mortgage: 

800-970-7766

Get Started

SIMILAR ARTICLES

Consider a HELOC for Home Improvement Projects

Discover how to use your home’s equity for home improvement projects and renovations. Take advantage of HELOC’s low-interest rates to upgrade your home.

Couple calculating a budget together.

Top 10 Benefits of a Home Equity Loan

From paying down debts to paying for renovations & college, home equity loans have many advantages. See what they are & if one is right for you.

Couple looking over documents

How Much HELOC Can I Get?

Learn about Home Equity Line of Credit (HELOC) min and max loan amounts, how to increase a HELOC, cost planning, and how to receive a HELOC today.

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Top 10 Advantages of HELOCs – Especially With a Credit Union

Discover why credit union HELOCs are incredible – from low credit union HELOC rates, and low fees. Read on for more.

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HELOC LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Home Buying Steps

  • Getting Started
  • Finding a Home
  • Getting a Mortgage
  • Home Ownership

Mortgage Topics

  • VA Loans
  • Conventional Loans
  • First Time Homebuyer
  • Home Equity
  • Homebuying 101
  • Checklists
  • Adjustable Rate Mortgages
  • PenFed Top 10
  • Refinance
  • Jumbo Loans
  • FHA
  • Videos

Mortgage Products

  • Mortgage Center
  • Refinancing
  • Home Equity

PenFed HELOC

Rates as Low as % APR* with flexible use of funds

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Disclosures

1Prime Rate is % as of . The APR for this Home Equity Line of Credit (HELOC) is based on prime plus a margin and can change monthly. Fixed Rate Advances will be amortized over the Fixed Rate Advance Term, with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin, and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes.

  • Annual Fee: Notwithstanding the foregoing, an annual fee of $99 will be assessed on each account anniversary.
  • Home equity lines of credit (HELOC) are variable rate loans and the interest rate is subject to increase after consummation of the loan on monthly basis. Closing costs range between $500 and $8,500 for credit lines of $500,000. Contact a representative for additional details.

Appraisals: PenFed will attempt to establish value via an independent method. If that method is unsuccessful, or the value is not sufficient for the amount requested, an appraisal will be required regardless of CLTV. An appraisal is always required in the following circumstances:

For all loans with a loan amount greater than $400,000.

If an appraisal is required, it must be ordered by PenFed. You will be contacted for authorization and payment prior to ordering. Appraisal fees average $550 to $850 (some run higher).

  • Closing Cost Credit: PenFed will pay most closing costs associated with a home equity line of credit (HELOC), which includes credit report, flood certification, settlement/closing, property ownership and encumbrances search, recording, property search, and quick close. Member is responsible for any city, county, and/or state taxes if the subject property is located in FL, LA, MD, MN, NY, TN, or VA. If an appraisal is required, the member, who is responsible for the fee whether or not the loan closes, will pay the cost.

Interest may be tax deductible, consult a tax advisor for further information regarding the tax deductibility of interest and charges.

Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Advance Period. During your Advance Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.

Fixed Rate Advances will be amortized over the Fixed Rate Advance Term with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes and 4.75% for investment properties.

Property Insurance: Property insurance is required.

Multiple PenFed Loans: Multiple PenFed Equity loans and HELOCs are available as long as the member and collateral qualify (except Texas). For Equity loans and HELOCs the total indebtedness cannot exceed $500,000 for all PenFed Equity and HELOCs combined.

PenFed does not lend on:

  • Mobile homes
  • Co-ops or time-shares
  • Properties that are currently listed on the market for sale
  • Commercial property or property used for commercial purposes, even if a residence is part of the property
  • Undeveloped property (land only)
  • Properties with more than 4 units

Properties that are currently under major construction/renovations: Property must be fully livable, with no safety issues. (Examples: no missing rails from stairs/decks, no open walls with wires showing, missing kitchen appliances/counters, missing bath fixtures or unfinished pool).

  • Additional limitations may apply

Home Equity Line of Credit:

  • This Account has a Draw Period of 10 years, followed by a repayment period of 20 years.
  • If only minimum payments are made during the draw period, the loan balance will not decrease.
  • In Texas, the maximum CLTV available is 80% on owner occupied properties. Additional restrictions apply in Texas, so please ask a representative for details.
  • In all other states, the maximum CLTV is 85% on owner occupied properties and second homes. Additional restrictions or requirements may apply based on application characteristics.
  • Property type of Condo has a maximum CLTV of 80%.
  • The maximum CLTV available is dependent on credit qualification.
  • Rates vary depending on owner occupancy and CLTV and other loan criteria.

Minimum Loan Amount Requirements in all States:

  • For an owner occupied property or second home the minimum loan amount is $25,000 and the maximum amount is $500,000 with a CLTV of 85% or less of the fair market value.

Other terms and conditions apply; call 844-918-4307 to speak with a representative for details. All rates and offers are subject to change without notice. To receive advertised product, you must become a member of PenFed.

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This credit union is federally insured by the National Credit Union Administration. Rates are current as of October 2023 unless otherwise noted and are subject to change.

APY = Annual Percentage Yield
APR = Annual Percentage Rate


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You are leaving PenFed.org and entering a third party Website that is not a part of Pentagon Federal Credit Union.


The content you are about to view is produced by a third party unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Realty, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Realty, LLC, see the Affiliate Business Arrangement Disclosure.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website.


The content you are about to view is produced by a third party website that is unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Title, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Title, LLC, see the Affiliate Business Arrangement Disclosure.


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