at 5:47 PM
As every homeowner knows, there's a lot of thought and planning that goes into a successful home improvements project. And the question "How am I going to pay for this?" is a big part of the equation.
In this post we'll cover a number of the financial options available
. Then you can select the one best suited to your needs and be on your way to a beautifully renovated home!
Formulate a Payment Plan
Perhaps the best place to start when thinking over payment options is to speak with your contractor
and lender to make sure your project is financially feasible. You'll need to consider the amount you can pay out of pocket and the amount you'll need to borrow. While credit card payment is always an option, it is probably the most expensive. For bigger projects, home-equity borrowing is more practical. Oftentimes homeowners are able to borrow up to 75% of their homes' appraised value.
Refinancing Makes Sense
If you're finding yourself stuck with sky-high interest rates, you might consider taking out cash on a refinanced mortgage. With enough equity you'll likely be able to include closing costs in the loan. But remember you'll need to allow 45 days to close on the loan.
Consider a Home Equity Line of Credit (HELOC)
It can be a lot easier to get a HELOC
than a fixed home equity loan
, since you simply tap into the money when you need it. Likely the only fees you'll pay on a HELOC
are for a credit check and appraisal, and you'll be able to close on the line in 4 weeks. There are a number of benefits here such as paying interest only on the exact sum you withdraw, and being able to use the credit line after the completion of the project.
Construction Loans Are an Option
If you're planning to build a new home or do extensive remodeling to your current home, a construction loan will give you the buying power you need. Depending on the lender, you may be able to lock into a fixed interest rate during the construction period (6-18 months). Upon the completion of the project, the loan will change into a permanent mortgage.
Now that you've got your finances arranged, are you looking for someone to get the work started? If so, contact Quarve Contractors, a Minnesota licensed exterior remodeling company. We've been serving the Minneapolis area for over 30 years now and would love to make your home our next project!