How To Finance Your Home Renovation – Renovating your home can be an exciting, yet stressful time. On the one hand, you are eager to make improvements to your living space and enjoy the end results. On the other hand, upgrades are costly and it can be tricky when it comes to deciding the right financing option for you. Check out the following financing options with some help from realtor.com to make the right decision for all your needs.
Pay with Cash: Using cash from a savings account or other nest egg is a great option to pay off renovation costs. What’s more, you won’t acquire additional debt! However, it may be best to get an estimate of renovation costs before counting your cash. Renovations can be expensive, and you may not want to deplete your whole savings. Alternatively, you may decide you want to save up your money for a few years before tackling your big renovation project.
Whip out the Credit Card: If you have a credit card with a very low interest rate, or even a 0% interest rate, you can pay for your renovation with that credit card. Be advised that this is a good idea only if you believe you can pay off your credit card debt before the interest rates shoot up, as they often will after a set amount of time.
Personal Loan: Taking out a personal loan is less chancy than a credit card, because interest rates are fixed and require less risk. However interest rates for personal loans tend to be higher than home equity loans, and are not tax deductible, so it is important to shop all your options before deciding on a particular loan.
Consider a Home Equity Loan: Home equity loans can be a good option for large- scale renovations because you can take out more money often for a lower interest rate, and the interest are sometimes even tax deductible. However the amount you borrow is based on collateral in your home, so the financial risk is a bit different than a personal loan, which requires no home equity.
At the end of the day, the right way to pay for your upgrade really depends on two things: the type of project you are focusing on and what is best for you and your family. You may want to meet with your financial adviser before make the most of your money and your renovation, so that you can enjoy the end result to the fullest.