Five Creative Ways to Finance Your Home Renovation
After you have lived in your home for a few years, things begin to break, there is regular wear and tear on the house and sometimes you just get tired of looking at the same old colors, fixtures or furniture. Like most people, you may not have $30,000 or $40,000 just lying around. So, you say to yourself, “How do I pay for what it is that I want to do?” Also remember that renovations should be an enhancement to your house, so think it over carefully whatever you decide to do. Listed below are just a few unique ways to finance those much needed renovations.
Money talks! This method is by far the best and easiest way to go. However, a lot of people don’t always have the funds needed for their particular projects. If you don’t have the amount of cash you need on hand, save the money until you are able to make the renovations. For a smaller project it may be easier than you think. Having the cash on hand to do it is certainly easier, because once it’s paid for, it’s paid. If you have a larger project, just budget and put away a certain amount each pay period until you’ve reached your goal. If the renovation is needed right away or needed, you may have to go another route, like those listed below.
Take a Loan from 401K or IRA
Loans taken from 401K or other investment accounts are normally guaranteed loans and can be taken mostly any time, depending upon your plans rules. With these loans, you can take them and use them for any reason. When the loan is paid back, the interest is paid back to you since it is your account. The downside to taking one of these types of loans is that it reduces the amount of money you will have when you retire, among other things. There are many arguments on both sides concerning taking loans against your 401K, so be sure to do your homework before engaging these loans. If you are deciding to take a loan from an investment account, it is a good idea to speak with your financial advisor before doing so.
If you have another property or real-estate you can use to back a loan then a hard-money loan may be the route to go. The only downside is that interest rates may be higher. You can see if this option is right for you by contacting a Texas hard money loan lender.
Another option for financing your renovation would be to take a Home Equity loan. Before deciding to go this route, you will need to do some research and think about things such as how long the project will take, how much money will it take and who will do the work, just to name a few. You should also decide what your budget is for your particular project. Most banks will allow you to borrow the money and pay for it over a certain period of time.
Be cautious if this is the route you’d like to take. If you are able to pay your balance off quickly, this might be a good way to go. However, interest rates can sometimes be as high as 15% making the pay-off time much longer to pay in full. You may also want to try a credit card that has 0% interest and make sure you pay the balance in full before interest begins to accrue.
Make sure that whichever method you choose to finance your home improvement project fits your budget. In addition, make sure you do the proper research to ensure that you choose the right option for you and your family.
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