If you’re ready to start a kitchen, bathroom or entire home remodel, it’s time to think about how you’re going to pay for it.

A home renovation is a great way to add value to your home, but it can also be an expensive one. The average remodel costs between $30,000 and $70,000.

Some people are in a great position to pay cash for the costs of a remodel, but for many people, some type of financing is often necessary to pay for some or all of the project.

The good news is that there are many ways to finance your project!

Here are some common ways to finance your home renovation:

Home equity loan or line of credit

If you plan to keep the home, you may want to consider a home equity loan or line of credit. These loans allow you to borrow up to 80 percent of the value of your home, minus any outstanding debt on the property.

These loans require interest rates that are typically lower than those charged by unsecured loans like credit cards. They also allow homeowners to make multiple payments over time instead of paying back their loans all at once.

Home Refinance

If you’re paying high interest rates on credit cards or other loans, refinancing may be an option for you. Consolidating multiple debts into one large loan can lower your monthly payments substantially — especially when compared with making minimum payments on several different accounts.

If your credit score has taken a hit since taking out those original loans, though, expect lenders to charge higher interest rates than they would

Personal Loans and Credit Cards

If you don’t have enough money saved up for your project, consider using a credit card or taking out a personal loan from a bank or credit union.

Credit cards are an option that homeowners can use for financing. However, this is usually recommended only if you have excellent credit scores or if you have a high enough limit on your card so as not to get yourself into trouble with debt payments later on down the road.

Some credit cards offer an interest-free grace period before they start charging interest on new purchases (which means they’re free money when used responsibly).

If you don’t have enough savings but don’t want to incur credit card debt, consider borrowing money from a bank or peer-to-peer lender at rates that are generally lower than those offered by credit cards (though not always).

Personal loans usually have fixed rates that range from 6 percent to 20 percent, depending on your credit score and other factors.

Construction loan (or hard money)

Construction loans are used by contractors who need immediate access to capital during the construction phase of a project so they can purchase materials or pay workers without having to wait until the project is completed and sold for full value.

Before you run and get a loan, the first step to financing your remodel is to determine how much you can afford.

If you have a lot of debt already and can’t afford another loan payment, then financing isn’t a good idea. But if you’re able to afford it and need to, then go for it!

Add up all your home renovation costs. The cost of materials, labor, and other expenses will vary depending on the extent of the project, so it’s best to get an estimate from a professional contractor before you start shopping for materials or hiring workers.

Then add between 10% and 20% for unexpected costs that always come up when doing major work on a house (like replacing blown-out electrical wires or running into unforeseen plumbing issues).

It’s also important to remember that this is a big-ticket item and you’ll want to make sure you have enough cash available in savings or an emergency fund to pay for any unforeseen costs.

Make sure that you shop around for the best interest rate and terms available from different lenders.

This is where doing research online can really pay off because there are tons of great resources out there with information on what interest rates lenders are currently offering on loans like this one.

You may even find some lenders who offer special incentives.

Pin It on Pinterest

Share This
Call Now ButtonCall Now