Planning a big remodeling project is exciting. But you need to find a way to pay for it. Here are a few options to make financing a remodel easy and affordable.
More than 77 percent of homeowners plan to remodel their homes. And if you’re one of them, financing a remodel is a huge priority.
Depending on the type of project you’re planning, it could cost thousands of dollars! But that doesn’t mean it’s impossible to turn your house into your dream home.
All you need to do is pick the right financing method. So, where do you start?
There are dozens of ways to pay for remodeling projects. But here are six of our favorite methods.
- Use Your Savings
The best way to finance any home improvement is to pay cash up front. This allows you to cover the full cost of the project without going into debt.
As soon as you start thinking about making improvements, boost your efforts to save money.
Look for ways to cut back on your expenses. Do you buy coffee every morning or eat out for lunch twice a week? If so, you could save more than $20 a week by cutting back.
Take the money you’d spend on those purchases and put it in your savings account. Once you have enough to cover the cost of your home remodel or renovation project, you’re good to go!
- Refinance Your Mortgage
Believe it or not, you can mortgage refinance your home to get access to extra money. And you have several ways to go about it.
You can refinance your mortgage for a new loan with a lower interest rate and a longer repayment term. This lowers your monthly payments. You can then use the money you would have paid on your old mortgage towards a home remodel.
This takes the most time.
Or you can refinance your mortgage for a home loan larger than your original loan. Your payments will, at best, stay the same. But for most homeowners, those payments will increase.
The benefit to refinancing your mortgage for a larger amount is that you get the money up front.
- Take Out a Personal Loan
Depending on the size of your project, you can always take out a personal loan. Your bank, local credit unions, and online lenders all issue personal loans.
You can use the money for any project without concern. And you get the money as soon as the lender approves your application.
These loans are great for people with high credit scores and low existing debt. The better your credit is, the lower your interest rate will be.
If you choose to take out a personal loan, make sure you can afford the monthly payments. Missing payments or defaulting on the loan damages your credit score. And the lower your score gets, the harder it is to get other types of financing.
- Do What You Can Yourself
The cheapest remodeling projects are the ones you can do yourself. And the more work you take on, the less you have to finance.
This can save hundreds over the course of the remodel. But there are limits.
Minor projects like painting the dining and living rooms are easy enough. Others, like redoing the plumbing or laying new floors, are best left to the pros.
Doing whatever you can on your own is ideal. You’re only paying for the cost of materials and your time.
If there are tasks you’re not comfortable with, that’s okay. You can use a combination of your savings and personal loans. Or add those funds to your refinanced mortgage to cover the rest.
- Pick Up a Side Gig
The more you have in savings, the more you have to pay towards your remodeling project. But what if you’re already living with a tight budget?
You can always pick up a side gig! Think about the skills you have.
Are you an animal lover looking to get a bit of exercise? Start walking dogs in your neighborhood.
Do you have a nice car and a clean driving record? Sign up as a driver for a rideshare company.
Almost anything can turn into a side gig. Use your imagination and find something you enjoy doing.
Then, bank whatever you make from that gig and use it to cover the cost of your remodeling project.
- Use a Credit Card
What happens if you can’t refinance your mortgage or have bad credit and can’t get a loan? You need to start thinking about alternative financing methods.
And credit cards fit the bill!
Unsecured credit cards give you access to the money you need up front. And you can keep using them as you pay the balance down each month.
But what if you have bad credit? Well, there are plenty of credit card issuers ready to help. Most will offer at least a small line of credit to borrowers.
As you make regular payments on that credit card, you’ll start building your credit score. Over time, your credit card issuer might offer a higher line of credit. This means you’ll be able to finance more expensive projects later on.
If you choose to open a credit card, take care to make monthly payments. Always try to pay the balance off in full. If you can’t, pay more than the minimum monthly payment to get the balance down.
Financing a Remodel Is Easier Than You Think
Financing a remodel doesn’t have to be a difficult choice. Take a look at your savings and think about how much you’re willing to contribute.
You can always take out a loan or get a credit card to cover the rest.
But if you feel up to it, combine these financing options with a bit of DIY. Check out our latest posts for inspiration and see what a bit of sweat equity can do.