Home improvement projects are daunting, and strike fear in the hearts of many, including those who have been down the construction road before. Working with contractors, securing materials, choosing colors and fixtures, and time management are all factors that go into planning and implementing a major project or renovation to your home.
Then there’s the cost.
Home improvement and the redecorating that often accompanies it are both expensive undertakings, and you might be frustrated and more than a little nervous about how you’ll pay for it. Fortunately, when it comes to home improvement there are more than a few ways to secure the funds and pay for the project without breaking the bank.
If you’ve got a renovation or other home project looming on your horizon, check out these ways to ensure that all the costs are covered, easily and efficiently. Your choices are much greater than you might think.
1. Personal Savings
Obviously the best way to pay for anything, home improvements included, is with cash. If you’ve planned ahead and saved for this undertaking then you’re likely in the clear. Having cash on hand means that you’ll be able to start sooner and have your project finished on time.
However, you will need to stick closely to that budget, and this can be tricky. Home improvement projects are notorious for exceeding expected costs. If you’re using your savings make sure you have a cushion or back up plan to pay for unexpected overages.
2. Refinance Your Mortgage
Another option to secure cash for your project is by refinancing your home mortgage. If you’ve owned your home for some time this not only can get you cash back but you can also secure a lower interest rate at the same time.
Essentially what you’ll be doing is securing an entirely separate mortgage loan, paying off the old one, and using the remaining cash for home improvements. This is a great plan if you intend to remain in your home for a while. However, remember that this is a loan process, and these can take some time to complete.
3. Home Equity Line of Credit
If you’ve owned your home for quite a while and have built up a substantial amount of equity, then a home equity line of credit is the best choice if you need funds for renovations. This type of loan is based on the amount of equity you have, so the actual loan amount will vary.
In some cases you can receive up to 100 percent of your equity, but typically that number is nearer to 80 percent for most home owners. This loan generally has a fixed interest rate and set amount of time for repayment.
4. Home Improvement Store Credit & Loan Options
Another great way to finance your home projects is through home improvement stores themselves. The major chains, Lowe’s and Home Depot, each have their own specialized financing programs, but each is quite different than the other, so you need to do your homework.
Home Depot offers an actual loan of up to $40,000. The interest rate is low at just under 8 percent and you have 84 months for repayment. Lowe’s offers an in-store credit card that can be used for project purchases, and you receive 5 percent off one purchase of more than $299. One of the biggest factors in your choice is deciding which store is closest to you, but each is a great option.
5. FHA Loans
Government loans through the Federal Housing Administration are another great choice. These are typically one-time loans and must be applied for through an FHA approved lender. There are two types of these loans: the Title 1 loan offers up to $25,000 for a single family home, and the Section 203(k) loan carries less restrictions and is perfect if you’ve just purchased a fixer-upper.
Home improvements can carry with them a great deal of hassle and frustration, the greatest of which is paying for it all. If you want to turn your house into the home of your dreams, consider the array of financing options above. You might find it easier than you thought to pay for the project, and not deal with the money headaches that you might have imagined.