Have you only been in your new home for just a few years? Months? It doesn’t matter, truth be told; you will undoubtedly need a remodel at some point.
There could be some dents on your roof or some mold infestation on your wall. Damages aside, you might want to spice your home to meet up with trendy designs.
Either way, you’d have a remodel project soon enough. And when that happens, you will need money.
How much money are we talking about exactly?
Unfortunately, there is no fixed quote. Home remodel finances could be about ¼ of your monthly earnings. On the other hand, it might be as massive as your entire pension and all that within a flash.
Well, you could do home remodeling on a budget. Even at that, we’d advise you to know the options to fund your aesthetics project from the start. So, what are they?
- Cash-out refinance
- Credit cards
- Government loans
- Home Equity Loan or Line Of Credit (HELOC)
- Sweat Equity
- Zero-Interest Loans
Before we explain the listed options, let’s answer this crucial question:
Should You Fund Your Home Remodelling Personally?
Yes and no!
There is no perfect answer to whether you should finance your remodel from your pockets or with loans. What you should do is check your financial situation.
Can you afford your remodel estimates? If you can’t at the moment? How long would it take for you to save the required amount? Would you still need the home upgrade then? Besides, what is the size of your remodeling?
If you can answer those questions, you’d get a quick answer on how to fund your home remodeling project. And so?
- If the estimate wouldn’t hurt your accounts, by all means, go ahead and spend your money.
- However, when you can’t foot the expense timely or do so at the detriment of your earnings and savings, seek a loan.
- And for the case of emergencies, a loan would be most appropriate.
In any case, if a home upgrade will improve the curb appeal of your property, your investment would be worth it. So, do the remodel from your pocket or with loans; but ensure you get it done and rightly with the help of experts.
That said, let’s head back and discuss your home remodeling financing options!
Top 7 Options To Fund Your Home Remodel Project
We think it best to start with you!
What do you already have that can offset your home upgrade needs? Cash or liquid assets?
If you have enough assets, that’s a place to start. And the best thing about this option is that you won’t depend on anyone. Even better, you get all the funds instantly; you don’t wait for approval or liquidation.
Most importantly, cash and liquid assets come with no charges, fees, or interest. That means you will scale through the funds with glee and no fear. It is yours, afterall.
Of the two assets, though, cash is the cleanest option. There is no lender or buyer; you already have the money and can fund your project.
However, ensure that you don’t cash out your emergency stash. Else, you might be in a mess when health and other urgent money needs arise.
This option is the trickiest on our list. So, you might need critical analysis.
So, what is cash-out refinance?
Like the name, you will replace your present mortgage with a new loan and cash out the difference. The said difference would be what to cover your remodeling.
So, what’s tricky about that?
Refinancing means you extend your loan repayment period. In other words, you keep paying your debts despite the inconvenience.
Furthermore, refinancing means you will pay new appraisal, closing, and origination costs. And there are still tax and lender fees. Worse: your new loan comes with new interest rates that could be higher than your present mortgage.
Regardless, you can navigate cash-out refinance. Look out for offers with lower interest rates and shorter terms than your current situation. When you do, you won’t feel the stress. Besides, you will still have enough to offset your home upgrades.
Another option you can try for your home upgrade is your credit card. Like your assets, credit cards also make money available to you swiftly.
And depending on your credit card, you can assess large home purchases and items. But you must ensure you have a great FICO score to start. Aim for at least a 700 credit score and a history of early repayments.
Despite all the goodies of credit cards, know that the option comes with its risk. For a start, it comes with fluctuating interest rates, and the same applies to the fees.
Beware: don’t use a conventional card for an introductory offer card because their rates are different. Else, you must pay your entire loan at the end of the billing cycle.
Besides, credit cards require attention and maintenance on your part. Else, you might not even access its fund to start. Worse: with this option, you will lose yourself to the illusion that you have lots of money – whereas you are accruing debts.
In any case, you can reduce the risks on credit cards. How?
- Use a monthly repayment plan on your credit card or use one with such an option.
- Use zero-interest cards. With one, you needn’t worry about repayment till after six months or even a year.
Pro tip: avoid the temptation to offset a zero-card interest with another. Such an action could spiral you into a never-ending loop of loans.
Say credit cards are a bit edgy for your needs. Then, government loans could help. With one, you can rest assured of a stable interest.
Besides stability, the interest rates from government loans are incredibly affordable. And some even come with discounted insurances.
However, you must first qualify for these loans. About that, there are different kinds, audiences, and funding capabilities. Most importantly, know that you must use government loans for the reasons you intended.
In that case, one fit for remodeling purposes is the HUD Title I Property Improvement Loan. With it, you can get up to $25k, and that is even without any form of equity in your home. But as we stated earlier, the $25k should only meet home upgrade purposes.
Home Equity Loan or Line of Credit (HELOC)
HELOC’s interest rates are just as incredibly affordable as government loans. Even better, they offer you access to large amounts for even extra home upgrades.
Perhaps for once, you can not bother about credit cards or personal loans. HELOCs are what you seek!
However, note that there is something at stake: your equity. If you can’t repay the loan, it is almost like waving a sweet bye to your property.
Moreso, your loan limit depends on your equity. The more ownership you have of your home, the more HELOC you can get.
Note: take this loan only for capital-intensive remodeling. Also, try to limit the scope to your core purpose. Else, you will be distracted and accumulate unnecessary debts.
If you prefer to get hands-on about your home remodeling, try sweat equity. Like the name, you and your aids will sweat it out to take your home’s aesthetic to its grandest level.
But first, you must have friends and families who are willing to help. Mind you: anyone won’t suffice; your aids must have the required skills to remodel a home. Else, you’d better hire the professionals at Sound Renovation LLC.
After getting the right aid, you will pay for the materials. Yes, everything is not free!
Even the labor that seemed free isn’t technically. You will undoubtedly feed your aids who left their respective homes. Some might come with their families.
Either way, sweat equities can be fun and pocket-friendly. As such, they are great for your home to remodel projects. However, we will advise you to keep the “tinkermen” to minor tweaks. In other words, leave the large and delicate undertakings to experts.
Zero-Interest Home Remodeling Loans
Yes, you read right; the loans here come with zero interest. Does that mean no payment whatsoever?
No, you still have to pay for property taxes and even the elevated kinds for your home upgrades. And it’s not like the loan is entirely free. So, how come?
Zero-interest home remodeling loans have interests, but they are merely subsidies that you needn’t pay. And because of such laxity, there are caps to the money you can loan out. The max is $50k and a minimum of $25k.
Besides the loan limitations, there are also restrictions on what improvements you can make to your home. The rules are flexible, so you might want to check with the lender.
Alternative: Home Improvement Program (HIP) loans also come with subsidized interest. Depending on your county, you can enjoy a 3% discount on an 8% interest loan. But you should know you can’t use the funds for luxury upgrades.
You can remodel your home with or without a loan. Either way, ascertain your financial situation and choose only what best works for you.
And if you eventually decide to take a loan, choose one that meets your budget and timeframe. More importantly, find an option that can offer you all the funds at a go.
Overall, don’t go through the stress and still do a quack home remodel. If you would take a loan or spend your home, it is best you do it right and with experienced aid. We, Sound Renovation LLC, are that aid!
Reach out today with your needs, and we will discuss the quote and timelines!