Who doesn’t want to make their home better? Home is the place where we live in and spend our most of the life. When a family is increasing, you might be thinking to include a room for your family members by creating an additional room within your home. You might be thinking to update your color pattern with a new paint job or carpeting. There are a lot of ways through which you can improve your home.
Five Options to Finance Home Improvements
Of course, home improvements will demand money. These improvements, renovations or expansions can cost you from a few dollars to many thousands of dollars. But, the improvements will enrich the value of your home, and you will get that value out of your investment when the time comes to sell. For all the improvements you need money, from where you will get?
Let’s have a look at five options you can go about financing your home improvements.
1) You can use your cash
If you have cash in your hand and savings, you can use both to pay for your home improvements. In this way, you need not pay any interest fees or a loan to pay off. The problem is gathering the amount of cash needed. For this, you need to identify a budget and save on a weekly basis and wait until you have created the funds to proceed. After this, shop for the best deals on the products and proceed when you think is the right time. Many people use cash for smaller improvements, such as painting or upgrading some appliances.
2) Refinancing your mortgage
You can refinance your current mortgage for a large home improvement project. If you are carrying a variable rate mortgage, you can refinance into a lower fixed rate. Sometimes you can even lower your monthly payments or get a lesser term mortgage. The reason people refinance is to yield cash from their equity in their home. This means you will use the same property and clear the first loan with the proceeds of the new one. The additional cash extracted from the second loan is then available for use in large home renovations.
3) Take a Personal Loan
This is also one of the ways through which one can go for home improvements. So, take a personal loan for home improvement projects. You can obtain a secured loan when you have an automobile backing the loan. Based on your credit history and FICO score you may be eligible for an unsecured personal loan. You will also be asked to pay a lower interest rate on the loan.
To get a personal loan, you should raise your credit score by paying your bills on time and reducing your debt to credit ratio.
4) Home Equity Loans
Home equity loans (HEL) and home equity lines of credit (HELOC) can help you get good funds for larger home improvement projects. You will get the amount based on the equity you currently hold in your home.
A HEL will help you get the entire amount you are borrowing up front with a payment schedule of 15 to 30 years. A HELOC will help you withdraw money as you need it, and pay it back based on the amount you have borrowed. Interest terms may vary with HELOCs, so know the details before you sign.
5) Zero-Interest Home Remodeling Loans
Loans such as 203k rehab loans and USDA loans are offered by the local county government to homeowners who meet certain qualifications. However, your income and the value of your home must meet the financial guidelines of the program. If you qualify, these loans can help you save a lot of money while renovating your home.
On the whole, look at different interest rates on the various loans to secure the financing you need to start working on your project.