Options for Financing Home Improvements
As the economy slows, homeowners everywhere are starting to tighten their belts, so to speak, and prepare in case things get worse. With economic indicators showing signs that things will continue to be slow for the foreseeable future, it’s time to pull out all the stops to protect investments and money. One of the best investments that anyone can make is purchasing a home. While the housing market is not immune, it historically has been proven to be the best investment to generate generational wealth.
During times of a slowing economy, the best place to put money is somewhere that it will be safe. Why not invest it in the best investment, the home? Luckily, even if things are already tight, there are ways to go about getting money to pay for some upgrades or dream remodels. Here is a quick guide full of ideas about how homeowners can finance home remodeling projects to protect their biggest investment.
Take Out a Loan
Considering doing renovations to the home is a big decision. Home improvement projects can range from redoing small rooms to completely gutting a house. The first step in home remodeling is to decide how much work will be done and get an estimate. This number will help homeowners decide how to proceed.
For big projects, the first go-to source of financing is a personal loan. Personal loans are available to everyone based on their credit score, so some loans can cover small projects while others can cover large projects. Personal loans will carry higher interest rates but can help mend credit over time.
For a personal loan with a better interest rate, consider a home equity loan. Banks love home equity loans, which are also known as second mortgages because they use the home as collateral. This entitles homeowners to better rates for a lump-sum payout.
Refinance the Mortgage
Another way to finance home remodeling is to refinance the mortgage. When a home is refinanced, the old mortgage is paid off, and a new mortgage is agreed upon, reflecting a new principal based on the old principal remaining. The difference between the old mortgage and the new will be the budget for remodeling, meaning the longer the home has been occupied, the bigger the available budget.
This is a great way to finance big projects without having to worry about large spikes in monthly costs or servicing another loan. Additionally, the appreciation of the home plus the value of the upgrades can easily offset the extra cost of home improvements.
Use Credit
When dealing with home improvements, the biggest loan may not be desirable. Many people prefer to finance a project phase by phase instead of with one payout. That’s where home equity lines of credit (HELOC) come in. These lines of credit work like a home equity loan with the exception that the money is taken out as needed and the interest is only paid on money that is spent. This keeps bills and budgets more manageable.
Additionally, for smaller home improvement projects, homeowners can use a no-interest or low-interest credit card. However, credit cards are generally only recommended for smaller projects and when the homeowner can pay it off before interest is charged.
About A-Plus Air Conditioning & Home Solutions
A-Plus Air Conditioning & Home Solutions is a family-owned and operated company serving Austin and the surrounding areas for over 45 years. They offer fast, friendly service, flat rate pricing, and financing. Call them today for remodeling services in Austin, TX.
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