Whether it’s to add value or turn it into a place you love to live in, renovating your home can be expensive. The average amount spent on home renovations in the U.S. in 2016 was roughly $60,000, according to a recent Houzz survey. However, the good new is, there are a lot of financing options out there. While cash is always the preferred method of funding such lofty projects, many people turn to loans and credit out of necessity. You should carefully gauge your financing options, so you can make the decision that’s right for you.
Credit is an easy and convenient way of financing smaller projects that cost around around $15, 000 or less. Look at what your current card offers, or find a new one with 0% interest. Usually, cards provide 12-18 months of interest-free spending. It’ll then be easier for you to pay the full amount back in time. If not, you can always transfer the remaining balance to another 0% interest card.
The application and approval process for these low-interest cards is simple. Just be sure to understand the terms before you sign up to anything. Plus, you can get a refund from your card provider if the work isn’t fulfilled as expected.
If you’re sixty-two or older and an eligible homeowner, you can look into funding your renovations with a reverse mortgage. This simply means leveraging the equity you’ve built up in your home. Taking out a reverse mortgage is a great option with many benefits. You don’t need to pay interest and there’s no minimum monthly payment. You can pay as much as you want, or can choose to even defer repayment until you sell your property.
Personal or unsecured loans can finance more expensive renovations. These loans are straightforward to apply for and you don’t need to put anything up as collateral (your house won’t be at risk). However, watch out for the high interest rates, which are steeper than the rates you get with reverse mortgages. Be sure to do your research. Compare and contrast the terms and condition, costs, and interest rates (APR) of each loan in order to make an informed decision. If anything seems dodgy or unclear, avoid it.
Making home renovations is a big financial commitment. Take the time to research your options without rushing into a decision. Choose the right finance option for your situation and enjoy your new and improved home.