Creative Ways To Fund Renovations
It doesn't matter if you have lived in your home for many decades or are starting your homeownership journey. The idea that your home can be customized to suit your preferences and style, as well as any necessary repairs, can be both thrilling and terrifying. While the exciting parts are obvious, the most daunting part is often about money.
It's not uncommon for homeowners to want to update their houses. 77% of them believe that their home could be improved. They are most interested in updating their homes (25%) and improving their bathrooms (22%), as well as landscaping (21%) and changing the flooring (21%).
You're not the only one wondering how to finance your home improvements. Nearly half the homeowners who intend to make home improvements aren't sure how to pay. Most homeowners pay for home improvements with cash, debit (57%), or with a credit card that they pay off instantly (27%). Others get creative to find the money they need to build their dream homes. These are just a few of the options that might be available to you to build your dream home.
Refinance Your Mortgage
You can save extra money every month by refinancing your house. Depending on your current mortgage payment, you might be eligible to refinance with a lower interest rate or for a longer term. You could save the difference and use it to pay off your monthly mortgage payment until you are ready for renovations.
A cash-out refinance a faster way to refinance your existing loan to finance your next major project if you have enough equity. This is where you can refinance an existing loan to get a higher than your current owe. This allows you to pay off your mortgage early and still have enough cash to renovate your home.
Refinance is a major decision. You'llFirst, you'll need to weigh the costs of refinancing. To determine if refinancing is the right choice for you, use our mortgage calculator to calculate your savings and then view the most recent refinance rates from multiple lenders anonymously.
Get A Home Equity Line Of Credit
Refinancing is not an option if you have a low-rate mortgage or you have already paid off the loan. A HELOC allows you to tap into your equity and pay for home renovations without refinancing. In that it limits the amount you can borrow against, it works much like a credit card. However, the interest rate will be lower than that of a credit card because your house secures the loan. The HELOC is an adjustable-rate loan, but you can also get fixed-rate advances if your preference is for stability and a rate that will not change.
HELOCs have had the greatest benefits in the past because the interest on the HELOC can be deducted from taxes up to $100,000. The newly passed tax law makes interest-free HELOCs subject to a few restrictions. The most important is that the money can only be used for home improvement. If you plan to use this money for home improvements, that is good news.
Get A Home Equity Loan
Homeowners have another option: a home equity loan to access their equity and pay for renovations, but not refinance their entire mortgage. This type of loan is not like a HELOC which allows you to borrow as you need it. Instead, you must take out all of the cash at once. In addition, because it is a fixed-rate loan, the interest rate for a home equity loan will be higher than a HELOC's adjustable rate. Because many homeowners receive them along with their first mortgage, home equity loans are often called "second mortgages." To get a home equity loan, however, you do not need to have a first mortgage.
It can be difficult to choose between a cash-out refinance, a home equity loan, or a HELOC. Discuss your options with a lender before you make a decision.
Crowdsourcing
If you don't feel like you can take one of the traditional routes, your parents may be able to help you get the kickstart you need to finance your renovations. If they have the resources, that is. In addition, you can save money by tapping into your family's funds, whether it be in the form of a loan and/or a gift.
Extended family and friends can help if the bank accounts of your parents have run dry. If you are just getting married, consider asking your friends and family to donate cash towards your remodel instead of a gift from the registry.
Be Creative To Earn More Cash
While it may not be for everyone, having a side business can help you save money quicker. In addition, there are many creative ways to make more money.
Renting out a bedroom to someone you know or to tourists a few times per month could be a way to make extra money.
Do you have an extra parking space in your driveway? People may pay a fee to park their cars in your spot, depending on where they live. You can also rent out other spaces like sheds and garages. Although storage units in traditional facilities can be expensive, you may be able to rent your space to a trustworthy neighbor.
Your commute to work by another means than your car. Many services will help you find someone to rent your car for one day or even several weeks. Signing up to drive for car-sharing apps could be a great way to make extra money for home improvements.
If driving is not your thing, or you don't want strangers in the house, there are other ways to make extra cash. For example, you could try dog walking, house sitting, or selling handmade crafts online to your co-workers or friends.
Save Seriously
It can be time-consuming, but saving money the old-fashioned way to fund your home improvement projects is still a popular option. You might be able to save money elsewhere or spend less on unnecessary items and put money aside for home improvements. It may add up faster than you thought!
You can save money by looking at your expenses. You can start by looking at the automatic monthly payments that you make to non-essentials (like music or television) and see how you can live without them.
