How to Finance Home Improvement
Home improvement is a broad term covering a variety of projects, including landscaping, garage work, interior renovations, and much more. Often a simple update can make a house more comfortable, stylish, or efficient. Some home improvements are more expensive than others, though, and some home improvement projects can hurt resale value.
There are several ways to finance home improvement, but the most common option is a personal loan. These loans come in various shapes and sizes, but they all serve a similar purpose. The best one for you depends on your needs and budget.
Before you get a loan, you should estimate the cost of your project. You should also compare the pros and cons of each option. If you borrow enough money, you’ll be able to finish the project sooner, reducing your risk of running out of cash during the process. However, be sure you aren’t borrowing too much. Also, your credit score should be checked to ensure that you qualify for the loan.
The home improvement credit card is a great choice, especially if you don’t plan on making your purchase over a long period of time. Many of these cards offer a 0% APR introductory rate, allowing you to finance a large project without paying the full price upfront. For example, you might be able to pay off a $5,000 home improvement loan over 18 months at 0% APR.
Another popular option is a home equity line of credit, or HELOC. This type of loan allows you to borrow against the equity in your home, and it’s a great way to access the lowest rates possible. While this loan isn’t the quickest or easiest to apply for, it is an effective way to make improvements around the house.
One other option is a second mortgage. An FHA 203(k) mortgage can help you take advantage of all of the benefits of both a loan and a home purchase loan. With the FHA 203(k), you can include the costs of your home remodel as part of your home purchase, saving you a considerable amount of money on closing expenses.
In addition to a mortgage, you can use a personal loan or a home equity loan to fund your project. Although both options are more costly than a credit card, they allow you to borrow more, and have lower interest rates. Depending on the project, you might even be able to find a loan that pays off the entire home improvement costs for you.
Finally, don’t forget to use the right tools. For instance, a new front door can be a cheap and easy upgrade, and can dramatically improve the appearance of your home. When buying appliances, make sure to go through a shopping portal, rather than a store credit card. Likewise, a shopping portal is a better option than a credit card if you are looking to make a big purchase, such as a television or stereo system.
Whatever option you choose, make sure you have the right documentation for your project. Make sure that you are using a legitimate contractor, and that you are properly insured.