Home renovation plans are always exciting. What’s not as fun is figuring out how to pay for them. The good news is that there are many options for homeowners looking to start a home renovation project to improve their home’s value or simply for personal enjoyment. If you’re curious about ways you can secure funding for a home renovation project, read on.
Refinancing
Start by taking a look at your credit score. If it’s in good shape, odds are that you’ll qualify for the best home loan rates and will be approved for a refinance. Something as simple as a lower interest rate could be enough to lower your monthly payment and free up cash each month to get started on your project.
When considering a refinance, the best way to start is to take a close look at your finances and look at your income ratio to determine the monthly mortgage payment you’d need for that project budget. Going to a lender with this information upfront will put you in a better position to find a refinance option that will work for you.
Home Equity Lines of Credit
Maybe you need a bigger lump sum or have an FHA loan that won’t allow a refinance. Another way to pay for your project is through a home equity loan or home equity line of credit. If either of these makes more sense to you, they are both great options for financing a home renovation. Better still, whether you plan to install a patio this year or need to fix the roof, you can always take what you don’t use and put it back on the mortgage or even use it to clean up other debt like student loans or credit cards which will only help your credit score.
Before you sign the paperwork, make sure you check to be sure you’re getting the best rate. The last thing you want to do is take out money against your house only to find out that you paid too much in interest for your renovation project or that you didn’t grab enough money to cover it. Do your research ahead including getting job bids.
Paying with Cash Through Passive Income
The truth is, paying for your home renovation can be tricky. You won’t necessarily qualify for a new mortgage or line of credit. If you can’t get approval on a loan or aren’t happy with loan terms, it doesn’t mean you have put your renovation on hold. Instead, consider other creative ways of coming up with a lump sum cash amount to pull your project off.
Maybe this means exploring streams of passive income. Renting out your basement or that guest room could be one way to quickly make the money you’ll need to renovate. Reaching out to friends or family, grabbing a gig job, becoming an affiliate marketer, or working with a mobile advertising company could be options too.
In the end, there are no real wrong answers when it comes to coming up with a lump sum to pay for your home renovation. With good credit, a plan, and attention to interest rates or your savings account balance, you can put yourself in a great position to add value to your home with careful planning. Before jumping in, weigh the pros and cons of all your options and consider how your project will change the value of your home. When in doubt, reach out to your real estate agent, financial advisor, or other professionals with questions. A little creativity, imagination, and determination will go a long way in making your home renovation project all you’ve dreamed of and maybe even more.
