Want to make your home more valuable and cozy? Home improvement is the ideal solution for you. Housing upgrades turn a home into a comfortable living space, enhances its value, and efficiency.
But what if you don’t have enough money for a housing upgrade? While it is best to pay cash or save for home improvements, sometimes this goal is unrealistic. The best part is that it’s not a must for you to have money for a home upgrade.
Many people don’t realize that there are mortgage pay solutions that help pay for necessary housing upgrades like installing a new kitchen or roof. These loan options take the monetary load off you and ensure your house is upgraded into a dream home. This post highlights the five best ways to finance home renovations and why you need to consider them.
1. Personal Loans
If you’re considering making minor cosmetic improvements in your home such as installing sprinklers or a patio then taking a personal loan is an ideal solution. These loans are often designed for smaller projects that don’t necessarily qualify as ‘necessities’.
Why choose personal loans?
• They’re cheap and easy – the fact that you don’t require any collateral makes it easier and cheaper for home improvements. Also, compared to home equity loans, the application is a breeze. It doesn’t take much time to get approved because you don’t require any appraisals, thus ideal for funding home renovations.
• Fast repayment methods – repayment periods of a personal loan takes less than 10 years to repay. Compared to home equity loans, which take up to 15 to 30 years, personal ones are easier and faster to clear, because you don’t have pay for too long, which translates to higher interest costs over time.
• Decent interest rates – it’s important to evaluate loan options carefully with justrightloans because a personal loan attracts higher interest rates compared to a home equity loan. But if you have good credit, and you are able to pay back the loan over time, you’ll be subjected or charged interest rates way below the 10% mark.
2. Home Equity Loans
For major and extensive housing upgrades, you can borrow against your home. This option is cheap for homeowners but nonetheless useful when you need proper housing upgrades but don’t have enough money to fund the project.
Taking a home equity loan attracts lower interest rates. Why? Because the consequences are more severe in case you default. If you are unable to pay back a home equity loan, the bank forecloses your home.
This loan improves your chances of getting approved for a larger loan for home improvements. That’s due to the fact that your loan is secure as opposed to a personal loan. It has more equity. Additionally, your home is enough collateral.
Another advantage of taking equity against your home is that it attracts less closing costs. In other words, when it comes to refinancing your loan it is far cheaper than to consider a purchase loan or a personal loan. It is important to compare home equity loans and personal loans before making an informed decision. At least, that way you get to know what you’re getting into.
3. Cash-Out Refinancing
This is a great option for financing your home improvement projects. This allows you to borrow extra money for extensive or major home improvement projects. While it is useful, you don’t get access to funds. The money goes out to pay contractors instead. And buy the necessary materials for renovations.
As the name suggests, you can use this financing to take care of your home improvement projects. It requires you get familiar or understand more about the loan-to-value ratio (LVT). For you to cash out funds for home renovations, you need enough equity for your strategy to work. If you have a higher equity, government programs will not get you approved for a second loan.
There is also the issue of higher closing costs when getting a cash-out refinancing to provide funding for your home renovations. If you don’t want to accrue debt when you get a brand new loan, make sure to pay extra towards your monthly rates. This helps extend the life of your loan as opposed to reducing it.
Since the cash goes directly to the contractors, the process can go faster. This will, in turn, help you to get the kind of home you deserve quicker.
4. Government Programs
If you are having a problem accessing a loan for home renovations because say of a credit issue or unlimited equity, a government program is an ideal option too. They can help you get approved for a loan through a credit union or your bank. But for this to work, you must ensure your bank or credit union works with the following government programs to start with:
• FHA 230k – you can refinance and fund your home renovations using this option. However, you are limited on how to use the funds on your project as well as who will do the work for you.
• FHA Title I – regardless of whether you have equity on your home or not, this loan program allow borrowing of up to $25,000. However, it limits on any luxury upgrades you may want for your manufactured home.
• FHA cash-out refinancing – to get this loan you need sufficient equity on your home. However, you can use the money lent out to you for anything including luxury upgrades.
• VA cash-out refinancing – even without a mortgage, insurance, you can access a loan from this government program which allows 100% loan-to-value.
5. Other Different Lenders
There are a handful of other ideal lenders who can help fund your home improvement projects. And most of these lenders offer unique programs that can help meet your goals first.
Many of not all of these lenders are recognized including online lenders, banks including local credit unions, specialized lenders, and mortgage lenders, among many others. They are all good sources of funding, and they are accessible to anyone who needs assistance and meets their criteria.
It is upon you to decide whom or where to borrow depending on your needs. There are also some community institutions that offer competitive loans to customers with ‘less than good’ credit. In addition, peer to peer lending sites is an excellent source too for housing upgrades funding.
If you want to improve your property’s value, and you don’t have money for housing upgrades, there are a handful of financing options to help you get a loan to meet your needs and exceed expectations, fast.
Remember, if you don’t have savings for upgrades or you don’t have enough money to finance your home improvement, there are several good options including personal loans that offer an easy solution. You can also borrow against the equity in your home, you can seek out cash-out refinancing, or get help from government programs for a loan.
Either way, there are many loan options for you to take advantage of. Before taking a loan, make sure to understand its benefits and the interest rates you stand to pay. Generally, aim to fully understand what you’re getting yourself into to avoid bad debts or any money-related issues in the near future.