How to Finance Your Next Big Home Improvement Project
No home improvement comes cheap or without stress, whether you hire experts or ask your friend for help. While there is not much you can do about the level of stress, there are many financing options you can choose from for your home improvement projects.
However, such a choice can be a problem unless the one(s) making the decision are properly informed about what each option entails. That’s why you need to really take the time to explore your choices and find out everything you need to know so that you don’t make a terrible mistake and make your life a living hell because of your poor judgment.
Cash payment
Ideally, you’ll have enough cash to pay for all the works, meaning that you won’t accumulate more debt to deal with. However, bearing in mind the going rates for renovation and remodeling works, it’s unrealistic to expect that everyone can afford that.
Still, if you have enough cash for some minor projects, cash is the best payment method, or you can look into the option of combining cash and some other financing option. The advantage of using cash is that you don’t need to take up a loan and therefore have no interest charges or fees, but you also won’t be eligible for tax benefits offered to those with a home loan.
Zero or low-interest credit cards
Those of you boasting excellent credit rating might be offered zero-percent interest on new credit cards or checks, which is an excellent way of financing smaller renovation projects, which don’t cost more than $15,000. Such arrangements are not difficult to qualify for and pay off, which makes them an excellent choice for those who have such an option.
Needless to say, you need to carefully read and understand the terms and conditions of such deals. For example, you need to know if there is a time limit for which you’re offered zero or low interest and whether you can pay off your debt before it. You definitely don’t want to agree to something that will see your interest rate rocket after the offer expires and, again, you have to accept that you won’t get any tax benefits.
Personal or unsecured loans
If your renovation costs exceed $15,000, you should definitely consider personal or unsecured loans, since such deals don’t require any collateral and you might get a higher amount than the one offered by your credit card.
Truth be told, you’ll have to pay higher interest rates and there are more elements you need to examine carefully before you sign up for such a deal. If you don’t feel confident enough about understanding what is required of you, you should probably find another solution.
Alternative solutions
Depending on where you live, you might be eligible for financial assistance provided by institutions specializing in financing home renovation and reconstruction projects. They also offer advice on how to make your home greener, thus protecting natural resources and saving you money on various bills.
If you’re interested in an offer like this, just follow this link and find out if you qualify for such a scheme. Again, make sure you understand how the whole thing works before jumping at the opportunity.
Secured loans
For more expensive projects, you should probably look into loans tied to your property. Apart from offering the lowers interest rate, they might also qualify you for a tax deduction, but you should check that with your tax advisor.
Naturally, not everything is perfect. You may have to face significant closing costs and much more complex application procedure and your home should be valuable enough to provide equity for such a loan. Also, some people misjudge their ability to repay a loan and bite more than they can chew. Make sure you’re not one of them.
How to decide on an energy improvement
Any attempt to make your home more energy efficient is a smart decision in and of itself, but some of them are more affordable and offer better value for money. As much as introducing wind turbines to your property might seem appealing, you should start by properly insulating home, make it more water-efficient and introduce more natural light by installing budget skylights. These are the improvements that all of us can afford and they will pay for themselves in short order, and once they do, you can move on to more expensive projects.
Final thoughts
As you can see, there are many options out there and there’s no universal solution. Depending on your financial situation and the estimated costs of the project, you can choose among several options, which means you have to carefully evaluate the pros and cons of each option, before choosing the best one.
Today’s guest writer: Lillian Connors
