Whether you want to undertake major overhauls or simple fixes, you need to plan your budget carefully. Every home improvement project will cost more than what you initially planned. This is why you need to have enough financial resources before you start with the actual project.
Several options can help you cover the bills for general repair expenses, materials, and labor. When you have an estimate in mind for your home upgrade, it’s time for you to consider various financing options available.
Savings
In most cases, cash and liquid assets are the best way to pay for minor home repairs and renovations. Paying cash means you don’t have to worry about applying and repaying a loan. It also helps you stick with the budget and prevent impulse purchases throughout the project duration. You may consider using your most readily available money you can have and avoid interest fees and other charges.
Personal Loans
If you don’t want to use your home’s equity as collateral, a personal loan could be a great option for you. Unsecured personal loans mean your home and assets cannot be repossessed when you fail to repay the loan payments.
Like any other loans, you can compare rates and fees from banks, credit unions, and online lenders to find the best deal. You can even snag a low-interest rate if you have a higher credit score. This type of loan is best for homeowners working on midsized improvement projects since it features a quick payout. Once the terms have been settled, your lender will deposit the money or provide you with a check.
Home Equity Lines of Credit (HELOCs)
HELOCs are secured loans that are considered a good home improvement financing option. It provides you with quick access to funds at lower interest rates than personal loans. Having enough home equity and a good credit score are required for HELOCs. Borrowers should have at least 15 to 20 percent equity to get pre-approved.
Since you are putting your home up as collateral, evaluate your budget to make sure you can pay your loans on time. Save your house from repossession by assessing every financial decision you will make.
Home Equity Loan
This type is considered the classic way to finance large home projects, such as room additions, and pools. When you borrow money against the equity in your own house, your loan will be paid out in a lump sum. The lump sum will be repaid in regular fixed monthly payments because the interest rate is fixed.
Similar to HELOCs and other secured loans, you run the risk of foreclosure if you fall behind on payments Another downside is that payment terms are less flexible than other financing options.
Mortgage Refinances
This option involves the process of replacing your current mortgage with a new mortgage. Mortgage refinancing extends more favorable terms and lowers the interest rate on your existing loan. When you choose this financing option, you can customize the terms of your mortgage and be able to pay your loan faster.
Cash-out refinancing is very common for home repairs. You can get a cash-out refinance loan for up to 80% of your property’s value. Choose this financing option if you want better rates and access to tax-free cash at closing.
Credit Cards
Consider financing with a credit card if your project will not cost you a lot. This financing option is perfect for gutter repairs and minor pipe leaks, which don’t require a major house overhaul. Many credit cards offer low-interest rates for the first few months while allowing you to earn rewards and cashback points.
However, you are encouraged to pay off your balance quickly as credit card rates can be exceptionally high.
Discounted Prices from Local Contractor
Some handymen and contractors also supply quality materials at discounted prices. They may also provide you with an installment plan when you are short on a budget and do not have much savings for your home repairs. Always ask your trusted handyman how to upgrade your home without breaking the bank.
Still Have Questions?
If you are still confused about which financing option is right for you, let Handyman Pittsburgh & Co. help you! We’d be glad to assist you in making a well-informed decision about your home repair project!