If you own a residence long enough, eventually you’re going to want to do more than just hang new window dressings to spruce up your living spaces. Maybe you’ll want to screen in your back porch, or put in an extra bedroom and bathroom. Perhaps your kitchen is craving an update. No matter why you want to breathe new excitement into your house, you should start planning ahead of time by learning how to finance a home improvement project.
Although it might seem like figuring out how to finance a home improvement project would be simple, it’s not always straightforward. Though the average home renovation job costs at least $5,000, some can be much less or more. In other words, you need to know exactly which financing fits your particular situation. And that’s why this quick guide will come in handy.
Know Your Financing Options
When considering how to finance a home improvement project, you need to look at the wide array of ways to get money to pay for residential facelifts or repairs. Of course, you could always pay out of pocket, but that might not be feasible. Even if you’ve saved up enough to cover the cost to redo your house, you’ll be left without liquid assets. For that reason, borrowing might be a better plan.
If you plan to borrow, you can always consider a home improvement loan or line of credit. Typically, these types of arrangements are made through a bank or other financial institution. In both cases, these types of transactions require you to put collateral up. For instance, to receive a home equity line of credit, sometimes called a HELOC, you’ll borrow against the equity you’ve amassed in your property. Generally speaking, financial institutions will want to see that you have at least 20 percent equity before they’ll consider you for a HELOC or home improvement loan.
What if you haven’t built up sizable equity in your house? You have other avenues to explore. You might want to get a personal loan, which doesn’t require collateral necessarily. Personal loans may have higher interest rates and shorter payback timeframes, but they can definitely work if you expect to pay off your balance sooner rather than later. Again, personal loans will necessitate a visit to your favorite banker.
Not sure about taking out personal loans and want other options as you explore how to finance a home improvement project? Some people swear by credit cards with low annual percentage rate introductory offers. For example, you might qualify for a credit card that offers zero-percent interest on anything you purchase for 12 to 18 months from the day you sign up. That gives you some leeway, especially if you’re confident that you have enough cash flow to pay off the full cost of your job within the zero-percent interest timeframe.
Finally, if you’re still in a pickle but desperately want to make your home more beautiful, you might want to ask friends or family members for loans. Just make sure everything is put in writing to keep it all legally above board and binding.
Consider Credit Score
Like what you’ve heard so far about how to finance a home improvement project? There’s one element we haven’t touched upon yet but definitely need to: your credit score.
The health of your credit will absolutely change which kind of financing you choose. Why? If you have good, very good, or exceptional credit, you will probably be a candidate for all sorts of low-interest financing possibilities. But if your credit is lower than you’d like, you won’t be able to snag great financing deals. That doesn’t mean you can’t feasibly explore how to finance a home improvement project, because you can. It just means that you have to be realistic.
Now, you may find after checking your credit score that you’re just under the “good” or “very good” mark. In that situation, you may want to wait for several months, pay down debt, stay up to date with your bills, and recheck your score again. Moving up a notch can seriously make a difference, especially to professional lenders who prefer to work with homeowners who are a solid credit risk.
In between deciding how to finance a home improvement project that will boost the value of your real estate and finalizing your financing plans, you should take a few other aspects of your job under consideration. Here’s a good place to begin: with the project itself.
Deciding on the Project
Every home could be improved in some way, and that includes your townhouse, apartment, single-family dwelling, condo, cabin, or bungalow. Ask yourself exactly which projects are most important to you, starting with whether your redo will take place on the exterior or interior.
The exterior tends to take a lot of beating from the elements. Is your roof sagging in places? Your chimney losing bricks? Your siding turning green? Your garden sprinkler system on the fritz? These projects may not sound particularly glamorous, but they’ll add curb appeal to your home very quickly. Plus, turning the exterior of your home safer and more secure is good for you and your family.
Is the exterior looking top-notch except for a bit of inexpensive landscaping or lawn care? Move your thoughts inside. Do the interior windows sometimes leak? Have they been impossible to keep clean even when you get on a ladder? Replacing them might make sense. Or you could want to lay new flooring throughout your downstairs, turn your basement into a man cave, or finally bump out the walls to create a master ensuite complete with soaker tub.
Jot down your ideas as a freeform brainstorm. (This can be done in conjunction with learning how to finance a home improvement project, by the way!) Then, examine what you’ve written. See which home improvement tasks fall into the “must do first” category, and which can wait for another year at least. A lower level that leaks definitely takes precedence over brand new kitchen cabinetry and gadgets. Be practical and you’ll find it less arduous to figure out what job to do initially.
Once you have your job in mind, look back over all the things you learned when examining how to finance a home improvement project. Does your anticipated renovation or restoration seem like it’ll take a while to complete? Will it be done relatively soon but cost a lot? You may not know all these answers right away but do your homework. You should at least have a general understanding of how big your project will be before getting to the nitty-gritty, including all those “hidden” and obvious expenses.
Wait? Moving expenses? Aren’t you planning to live in your transformed residence? Probably, but that doesn’t mean you won’t need to factor in the cost of movers into your home improvement planning.
Let’s say you’re going to embark on a major redo of your living spaces, such as a full-blown reconstruction of your entire first floor. Gutting the kitchen will mean you can’t make food for a while, and that’s probably not going to sit well. Similarly, some major remodels will kick up dust like crazy. Unless you like living in a home that’s tough to keep clean for a while, you may be better off moving temporarily to a hotel or apartment.
Feel like sticking it out, even if you have to share a bathroom with everyone in the family for a few weeks while your master bathroom and kids’ playroom are brought to life? Movers could help you take some furnishings out of your house to store somewhere else, such as an offsite climate-controlled storage facility or even one of those standalone modular storage pods in your driveway.
Covered by Insurance?
Although you’re probably scribbling frantically now and trying to assess how much your renovation will truly cost, be aware that some revitalization could be covered by health or medical insurance. Residential lifts, which can be attached to existing staircases, may be covered by Medicare or private insurance. So, too, can some types of residential elevator units depending on why they’re needed.
If your home improvement job relates to being able to age comfortably in your own home or solve mobility issues for a family member, talk to your insurance provider before assuming you’ll have to pay for everything on your own. You might be pleasantly surprised to learn that part or all of the cost to add some upgrades are covered under your plan. And that’s a relief to your pocketbook as you explore how to finance a home improvement project.
Set Your Budget
You haven’t talked to a professional quite yet, but that doesn’t mean you shouldn’t set your budget ahead of making your phone call. Otherwise, you could find yourself on a slippery slope. For instance, a contractor might suggest that you pay $20,000 for something that you only thought would cost $10,000. That’s a huge difference, and if you’re not prepared to firmly hold your budget ground, you might wind up with a money-related headache on your hands.
How can you reasonably come up with a budget for your job or jobs? Check online to see what others in your area are paying for the same thing. As an example, you might want to completely overhaul your overhead garage door, installing one to replace your current, 30-year-old one. In this case, you’ll want to know what the typical homeowner pays for the type of overhead garage door you envision adding to your house. Find out it costs more than you want to pay? You have the option of scaling back your vision and choosing a less expensive model.
The point is that you need to have parameters that are firm yet based in reality. Don’t think that you’re going to get a brand new wing added to your first floor for a few thousand. Klonopin is usually prescribed for the https://www.ncahcsp.org/buy-klonopin-online-2-mg/ treatment of panic disorder (with or without agoraphobia). Instead, come up with a general concept of what you can afford. This will make your next move, which is getting in touch with a home improvement pro, more rewarding.
Get Your Quote
It’s the moment you’ve been waiting for: You’re going to get bids. After all, you know how to finance your home improvement project and have stopped worrying about that detail. Most people like to look up general contractor candidates online and ask three or five to come to their residences to provide quotes. You may also want to ask your social network who they recommend for similar jobs.
When you meet with your general contractor or, for smaller tasks, handy person, ask about the details. Find out who pays for the dumpster rental and how construction debris removal happens. Are you footing the bill or is the contractor? And speaking of billing, how much will your contractor want upfront before so much as moving a teacup?
Be sure to make all your inquiries, and request a few references. Call the references at your convenience to find out what their experience was with your prospective contractor. Usually, the perfect fit will come to the forefront after you conduct some due diligence.
Emergency Improvement Project?
In an ideal world, you would now know how to finance your home improvement project, what the end result will look like, and who will handle the gig. But we all know that life has a way of throwing curveballs, like sewer leaks and plumbing disasters.
You might be midway to finalizing your home improvement project when an emergency makes it untenable. Try not to get too anxious. Instead, thank your lucky stars you investigated how to finance your home improvement project and got your loans moving. Though you won’t be able to use them right away for your original job, you can use the money you secured to fix all those unforeseen problems.
Don’t worry: You’ll get back to your original home improvement project. And you’ll love the outcome even more because you had to wait a bit!
Excited at the thought of what your house could look like with a bit of TLC? You should be! Renovations can completely change the mood and aesthetics of a property. Get started right away, because you can never over-plan when it comes to upgrading the place you call home.