Tips For Financing Your Home Renovation – Renovating your home can be an exciting prospect – you get to update and upgrade your home, which increases the value, whether you’re selling or not. Renovating can also be stressful though, especially if you’re not sure how you’re going to finance the upgrades. Here are some financing options to consider from Realtor.com.
Pay with Cash: Using cash from a savings account or other nest egg is a great option to pay off renovation costs. What’s more, you won’t acquire additional debt! However, it may be best to get an estimate of renovation costs before counting your cash. Renovations can be expensive, and you may not want to deplete your whole savings. Alternatively, you may decide you want to save up your money for a few years before tackling your big renovation project.
Whip out the Credit Card: If you have a credit card with a very low interest rate, or even a 0% interest rate, you can pay for your renovation with that credit card. Be advised that this is a good idea only if you believe you can pay off your credit card debt before the interest rates shoot up, as they often will after a set amount of time.
Personal Loan: Taking out a personal loan is less chancy than a credit card, because interest rates are fixed and require less risk. However interest rates for personal loans tend to be higher than home equity loans, and are not tax deductible, so it is important to shop all your options before deciding on a particular loan.
Consider a Home Equity Home: Home equity loans can be a good option for large- scale renovations because you can take out more money often for a lower interest rate, and the interest are sometimes even tax deductible. However the amount you borrow is based on collateral in your home, so the financial risk is a bit different than a personal loan, which requires no home equity.
These are some of the most popular options when it comes to financing a home renovation project, but to determine what is right for you, you have to consider the type of project and the type of financing option that will be best for you and your family. It is also a good idea to meet with a financial adviser before making a decision either way. Your adviser can help you determine how much money you have to put toward your home and they can help you manage your budget during the process so that all you have to worry about is enjoying the final product.