How to finance your home improvement project
Starting a home improvement project is exciting but it is imperative to carefully plan for the expenses that will go into the project. This way, there will be no room for disappointment and it will be easier to achieve your goal.
Depending on the size of the project, the projected expenses and the funds you have at hand, you can find a financing option that is suitable for you. Listed below are ways by which you can finance your home improvement project:
Your savings
If your home improvement project is something that you have been planning for a while, it is possible to have saved enough money that will cover all the expenses. This way, you do not have to seek financing, thereby foregoing paying of interests on debts or losing the property you might have used as collateral.
Get unsecured loans
An unsecured loan is a loan that is not attached to a collateral. This can be obtained from banks, commercial finance agencies or family and friends. However, your ability to get this kind of loans at low interest rates depends on your credit score.
If you need just a few hundred or thousand dollars, you can get quick loans with no collateral. These loans do not have a long application process, you can get the funds within 24 hours. And once you pay it back, you can borrow again if you wish to.
Home equity loan or home equity line of credit (HELOC)
The home equity loan can be described as getting a second mortgage on your house. You can borrow a one-time loan based on the amount of equity that is left on your house. This type of loan has the lowest fixed interest rate that you can get for a secured loan, so you can be rest assured that there will be no risk of increasing interests over the years.
A home equity line of credit functions like a credit card; you can continue to borrow any amount of money until you reach the maximum limit which is usually dependent on the equity of your house. However, unlike home equity loans, the interest rate for the home equity line of credit is not fixed, so it can be subject to change as time passes
You need to have a good plan of payment in place if you want to use this financing method as there is a risk of losing your house if you do not pay your debt as at when due.
Use of credit cards
If you need a small amount of money, using a credit card is a viable idea. However, you should be ready to pay your full debt as at when due. This is because credit card debts have very high interest rates and you stand to lose a lot of money if you are late with your payments
The important thing you have to do before you embark on a home improvement project is to make a solid plan that includes financing and repayment structures. This will make you adequately prepared for all the challenges that you might face as you start your project and you will be able to make every penny count.