Every home, few months old or many years old, needs improvements from time to time. These improvements may be in the form of minor fixes, repairs or even a complete remodel of sections of your home. In such cases, financing the project is usually the primary concern for homeowners. Below are the various options you can to chose from to get financing for your home improvement project.
1. Home Equity Loan
A home equity loan, is sometimes referred to as a second mortgage. Like a home improvement loan, this is a loan paid out in a lump sum that you can repay over a number of years in regular fixed monthly payments.
If you know exactly how much your project will cost, a home equity loan could be the perfect way to finance your renovation, since you’ll receive all funds upfront. However, missing payments can significantly hurt you. Since this type of loan also uses your home as collateral, your home could be foreclosed if you fall too far behind on payments.
2. Home Improvement Loan
Home improvement loans are unsecured personal loans offered by banks, credit unions, and some online lenders. Because they are unsecured, you don’t need to use your house as collateral. These loans typically have shorter repayment timelines, lower loan amounts, and fewer fees than home equity loans. They are typically suited for small or mid-sized projects such as a bathroom makeover or window replacement.
3. Credit Cards
If you’re making minor updates to your home, like upgrading a bathroom vanity or installing a new closet system, using your credit card might be one of the best ways to finance home improvements. This will minimize the hassle of securing a loan along with the added benefit that some cards are interest-free for the first few months.
4. Government Loans
Another option for home improvement financing is government loans. If you qualify for a government loan, you could save on the cost of interest and insurance.
How you pay for your home renovation depends on your financing situation and the size of your project. Saving up for a project and using it to cover your expenses is the ideal solution since you will not need any third-party financing but may not always be feasible. Unexpected expenses or losses are not uncommon.
To determine whether or not you require financing, you need to consider your monthly budget, the return on investment of your project, the size, and duration of your project. Some things to consider as you plan your finances are if you will be able to take on another monthly payment and if the home improvement project you are considering will increase the financial value of your home. If you’re in good financial health and the project you’re planning will increase the value of your home, the extra cost of financing could be worth it.
You can also explore some financing options for your next home remodeling project here. We can help you compare pre-qualified rates in less than 2 minutes and offer helpful tips to match you to the right financing. We also recommend checking out our blog post about questions to ask before hiring a home remodeling contractor.
MW Construction is an established contractor with experience renovating homes in the South Jersey area. We are a licensed and insured contractor providing high-quality and reliable services. We have offices in Northfield and Somers Point. Contact us today at (609) 635-3837 or (609) 241-8231 for further details or estimates. We will also be happy to discuss with you some of our recent projects.