5 Ideal Ways to Finance Your Home Improvements

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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.

Conclusion

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.

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