Home Improvements: Financing Your Home Renovation Plans
One of the largest investments you will make in your life is owning your home, and of course you want to make it your very own! With the popularity of home improvement shows like Fixer Upper on HGTV, there is a continual growing interest from Americans looking to renovate or remodel their homes. A strong housing market has spurred families to get on the home improvement train, as we all attempt to make our homes look the best they can. In fact, Americans are estimated to spend almost $340 billion on home improvements in 2018, a 7.5 percent increase. However, for most homeowners, when thinking of making any planned home investments, we must also consider how to finance the project. Whether it is an extension to accommodate a growing family, repairs to remedy the wear and tear or a remodel project to reflect changing tastes, here are a few options for financing home renovation goals.
Home Improvement Loans
If you don’t have enough home equity but are looking to finance your renovations, then consider a home improvement loan. One of the more popular options among homeowners, home improvement loans can apply to any kind of home improvement project from small amendments to the more pricey remodels. They operate on a similar premise as personal loans with fixed interest rates and a set repayment term of mostly 5 years.
For those that do happen to have adequate equity, the process can be much more straightforward and also opens up more options. A study done by the Joint Center for Housing Studies at Harvard University estimated that homeowners 65 and over will account for one third of home renovations by 2025. Retired or older homeowners looking to improve their homes or make adjustments for later life may consider home equity loans aimed at senior homeowners. By borrowing against their mortgage and equity, they are able to supplement any retirement income they may have to finance the renovations.
Personal Savings & Financing
Another common method of bankrolling your renovation plans: using your savings and personal credit. As you plan your renovation, one of the first things you should do is to set a budget. Depending on the nature and magnitude of your project, you may require the assistance of a home renovator in estimating the costs. Once implemented, you can then save monthly towards your DIY. The flipside: You may be saving for a while if it is a capital intensive project.
Another option is using credit cards and other credit facilities. An increasing number of Americans are paying for their home renovations using their credit cards. In 2015, the percentage of people using this method to finance home improvements jumped to 30 percent, a 9 percent annual increase. A great tip is to look for a card with 0 percent interest for a promotional time, since interest rates for most credit cards can range between 16-19 percent. In addition, take advantage of cards with cashback offers.
Using The Value Of Your Home
Finally, you can use the market value of your home as you apply for either a personal or home loan. In the case that your improvement project will add great value to the market value of your home, lenders are much more inclined to invest. High impact projects dramatically alter the resale price and as collateral, you can use your property. Lenders would be happy to get a property expected to appreciate after the renovations as collateral.
Your home is one of your most valued possessions. It is center of your family and the memories you build together. Whether it is to increase its value or improve your comfort, you can get started on making your home renovation dreams become a reality today. With a range of financing options, ranging from personal credit to home equity you can be planning your renovation sooner rather than later.
I hope you have found this information helpful today! Best of luck on financing your next big home improvement dream project!