Do you currently have a home improvement project in the planning stages? If so, you’re probably wondering how to pay for it. The good news is that there are all sorts of ways to cover the costs of adding a new bedroom, fixing up a kitchen or replacing a roof. That’s because a home is an asset, and most owners have at least some equity built up in the property. So, whether you intend to use money you already have, borrow against equity, save for a year or so, change your budget to accommodate the renovation expense or have another idea up your sleeve, you can use the following suggestions as a starting point.
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Use Current Savings
Perhaps you’ve already been socking cash away for a few years in hopes of paying up front for a home renovation need. If that’s the case, you’re one of the lucky ones. Be careful to shop around if you’ll be hiring contractors and ask about cash discounts. So many professionals expect homeowners to obtain financing that they’re often willing to give as much as 15 percent off total costs for cash payment. When you put your own money on the line like that, be extra careful to vet the companies you hire, read fine print on contracts and spell out everything in writing before work begins.
Work in Phases
If you don’t mind lengthy construction projects, consider doing your work in phases. It’s actually rather common for people who own larger homes to space out the jobs. One year, they’ll do the bathrooms and kitchen. After that, it’s on to the deck and pool. Year by year, you have the option to do whatever you can afford at that time. In five years or so, you have all the pieces of the puzzle in place. The bonus is that your home’s value will rise as you complete each phase of the work.
Refinance Student Loans
One of the easiest ways to free up money in the family budget is to refinance student loans from Earnest.com. Not only will your monthly payments decrease, you’ll have access to more favorable terms and interest rates. Refinancing education debt is a quick, painless way to uncover additional resources to pay for improvements to your house.
Borrow Against Equity
Many owners borrow against the equity they already have in their property. The advantage of this method is its simplicity, speed and favorable interest rates. Be sure to shop around for equity loans because some institutions offer much better deals than others. Some banks and other lenders offer special rates for borrowers who are using the money on renovations.
Chop the Budget
If you don’t have current savings to cover the expense of renovating, consider making budget cuts for a year or two. If you defer vacations, eliminate unnecessary discretionary spending on things like entertainment, and stick to your savings goals, you’ll be on the right track. Most homeowners are able to cut grocery bills by joining wholesale clubs and reduce utility expenses by installing smart thermostats and meters.
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