Remodeling your home can be an exciting time, but it can also be a stressful one if you’re constantly thinking of the cost involved. Even if they’re small changes, they can quickly add up, resulting in a hefty price tag that can cause one to gasp despite the beautiful end result.
iProperty Management, which provides home improvement statistics, highlights the fact that the combination of record-high home prices and the shortage of housing across the nations is leading more and more homeowners to stay in their homes rather than move and upgrade to a new one. If you’re one of those who are looking to remodel your home rather than buy a new house, these helpful tips can help you determine the best way to finance your future house projects.
Home Improvement Loans
A home improvement loan can be extremely useful if you’re looking to do a small to medium-sized project to improve your home. These loans are unsecured and are often obtained through banks or credit unions. Because they’re unsecured, these types of loans are typically paid back on a shorter timeline as compared to large loans like a mortgage, used for something like a bathroom or kitchen remodel. They generally don’t involve nearly as much money as something like a home owner grant, which typically covers the costs of obtaining homeownership as well as improving it and maintaining upkeep.
Home Equity Lines of Credit
Another tip for financing a home remodel is to seek out a home equity line of credit, also known as a HELOC. The interest rates for this type of loan are usually much less than an unsecured loan from a bank, making this type of financing ideal for larger projects around the home.
Home Equity Loans
A home equity loan, sometimes called a second mortgage, can be a good option if you’re looking to remodel a significant portion of your home. This type of loan is given out in a lump sum and can be repaid over several future years.
If you’re never refinanced or if it’s been awhile since you last refinanced your home or you’ve heard that rates are dropping, this could be a really smart way to get some extra cash to put back into your home. As interest rates lower, if you qualify, you can pocket that extra money that you saved on the interest and use it to cover the cost of your remodeling projects.
Credit cards aren’t the best option for most people, but depending on the interest rate, it could be a good way to finance your home remodel. As credit cards come with a credit limit in most cases, you won’t have to worry about overspending or taking out a loan that is too much to pay back. Another plus is that a higher interest rate can make you more motivated to pay off the debt quicker.
Sometimes, cash is the best way to go. If you’re someone who doesn’t like to take out loans or can’t get a good rate, saving your money ahead of time is a much smarter option. Paying for your project with cash allows you to be debt-free without a ton of expenses hanging over your head. With a set budget, it’s easier to plan what projects you’d be able to accomplish. Of course, this method requires the insight and the ability to save well before you can take action on those upgrades.