As a homeowner, you may have a long list of things you want to improve around your house. Perhaps you want to modernize the kitchen, need a new deck, or want an addition to your house. It’s also possible that you’re approaching this from the perspective of property development. You want to renovate the house so that you can sell the property at a higher price.
Although you have a clear vision of the changes you would like to make, you don’t have enough money to even start. It’s expensive to renovate a home. Still, it’s possible to come up with the money that you need with a little creative thinking.
Here are 5 ideas on how to raise the money to fulfill your home improvement dreams:
1. Take out a mortgage to finance your home renovation. Eagle Home Mortgage makes it easy to apply for a loan with their mobile mortgage app. It’s completely paperless and painless. After you download the app, you can apply directly from your mobile phone. For home improvements, you should either refinance your mortgage or get a reverse mortgage. The pros of refinancing your mortgage are that you can get a lower interest rate. The cons are that you have to be careful not to spread your renovation costs over a longer time than your project will last. The pros of a reverse mortgage are that you don’t have to pay the loan back until you sell the house. The cons are that it is a bit more expensive than the refinance option and you have to be at least 62 years old.
2. Cashing in some CDs to finance your home renovation. Paying with cash is probably one of the most convenient ways to cover the cost of your renovation. The pros are that you won’t have to worry about future payments and you won’t compromise the equity of your house. The cons are that you will lose all the benefits of interest you would have earned from your CD.
3. Cashing in some bonds to finance your home renovation. Again, you will enjoy all the benefits of paying with cash and eliminating the burden of paying for your renovation well into the future. The cons, of course, are that you will lose out on your investment.
4. Getting a home equity line of credit to finance your home renovation. This is a good option if you have a great first mortgage. The pros are that you can draw out as much money as necessary for your project and then pay it back at your own pace, provided, of course, that you make a minimum payment each month. You don’t have to pay any interest—unless you use the available money. In fact, this type of credit is good for as long as 10 years. This means that you don’t have to exhaust yourself with the home renovation by doing it all in one go, but instead, you can do it a bit at a time. The cons are that you could lose your home if you’re not regular with making your payments. So it’s not a good idea to get a home equity line of credit if you don’t have a steady income, but one that fluctuates because you work on commission.
5. Use your credit card to finance your home renovation. The pros are that you don’t have to wait for a loan approval. The money is immediately available. In addition, you can get reward points. The cons are that this is only good for small renovations and it will work if you just use the money for materials. If you also use the money to pay for labor and equipment, then it’s possible to quickly max out your card and then be stuck with a high-interest rate as you struggle to get your balance back on track.
In closing, it’s worth remembering that you don’t want to get too enthusiastic about your home renovation and run over budget. It’s easy enough to do. As you work on improving one area of your house, you’ll have these “aha” moments on how to improve other areas of your house. Another risk you face is when you go shopping. You’ll quickly realize that you were thinking too small and that there are lots of new products on the market now available to make your house look even better. You’ll have to quell all these creative impulses to avoid running over budget.
Architect: Moore Architects. Photos: Hoachlander Davis Photography.
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