With housing prices being on the rise, existing home sales are likely to increase, which is good for a homeowner targeting at getting some money out of house resale. Home renovation offers you an opportunity to improve your home and its overall value. It also meets the needs of the family, such as upgrading the playroom or bathroom. Most home renovation projects are flexible and you can change them anytime that you want to.
However, not all home improvement projects are the same or good investments and neither are they bad. If you have house problems like mold, asbestos and/or lead, a renovation might be a must, and it will be a different kind of home improvement than upgrading a certain room in the house.
You need insightful information that will help you make the right choices. Before you resort to home improvement, one of the things you need to take into account are the expenses. Here are some tips for funding your home improvement project.
1. Credit card
Using a credit card that you pay off every month end is a great option if you are capable of paying off the balance quickly which will earn you rewards. A credit card is however not a good choice if you’re working on a big project since you are likely to pay a higher interest until you finish paying off the balance. The other option is to use a credit card with 0% interest for a period of 12 to 18 months on the purchase. This is applicable only if you pay in full before the accumulation of the interest.
With a credit card, money can be obtained fast, although there is a risk of high-interest rates and fees.
2. Mortgage brokers
There are various mortgage brokers like Altrua Financial that guarantee lower mortgage rates and higher service. Get in touch with them to get more guidelines.
3. Cash and Liquid Assets
Paying in cash is one of the best and cleanest ways to pay for your home improvement since you will not be beheld by a lender. Savings, checking and savings bonds near maturity can be used in sorting out the expenses. You will not incur interest rates, fees, and charges, you will not be dependent on anyone and the funding speed is quick with no need to wait for the liquidation of funds.
A few of the cons to this is that this depletes any reserves that you may lose the ability to invest the money, reducing your available cash for emergencies or retirement accounts, and also most people don’t have much cash, especially for large projects.
4. Short-term loans
Personal loans that can be secured or unsecured and repaid at a certain interest rate are offered by banks and credit unions. In 24 to 60 months, you can repay your loan gradually at the agreed rate. Although the interest rates may vary, personal loans rates are normally lower compared to the credit card interest rate.
5. Home equity loan
With a home equity loan, you can write off the interest payments on your federal income taxes and also get lower interest rates. You can easily get large amounts of money for large projects, but depleting your equity reduces the amount get once you will get once you sell the house. One major setback is that not repaying the loan can cause you to lose your home in a foreclosure.You may also avail of a loan from USDA Rural development program which aims to help families repair, improve and maintain their home in good condition. This program applies if you are living in rural areas. You can check usda home loan map to know if your location is eligible for this program.
Whichever financing option you choose needs to fit in your budget. Try to limit the interest rates that will be incurred.