{"id":40946,"date":"2021-04-22T19:14:52","date_gmt":"2021-04-22T23:14:52","guid":{"rendered":"https:\/\/www.andysowards.com\/blog\/?p=40946"},"modified":"2021-04-22T19:14:54","modified_gmt":"2021-04-22T23:14:54","slug":"how-should-you-pay-for-home-renovations","status":"publish","type":"post","link":"https:\/\/www.andysowards.com\/blog\/2021\/how-should-you-pay-for-home-renovations\/","title":{"rendered":"How Should You Pay for Home Renovations?"},"content":{"rendered":"\n

If you\u2019ve decided you\u2019re ready to do a home renovation or improvement project, you may be getting excited about the prospect of a fresh, new space. <\/p>\n\n\n\n

That does beg one big logistical question, however\u2014how will you pay for it?<\/p>\n\n\n\n

Outside of paying with cash, which may not be feasible or ideal for your financial situation, there are other options when it comes to paying for a renovation. <\/p>\n\n\n\n

The following are details on some of the ways you can fund a home improvement project. <\/p>\n\n\n\n

Home Equity Loan<\/h2>\n\n\n\n
\"\"<\/a>
Home-Equity Loans and Home-Equity Lines of Credit: How They Work and When to Use Them<\/figcaption><\/figure>\n\n\n\n

A home equity loan is one option to pay for renovations. <\/p>\n\n\n\n

When you get a home equity loan<\/a>, you\u2019re getting a loan secured by your home. You can take out a home equity loan only if you have equity. Equity is the difference between what you owe on your mortgage and your home\u2019s current market value.\u00a0<\/p>\n\n\n\n

If you have paid your loan and you have more value in your home than what you owe on your loan balance, then you can borrow a part of that difference. <\/p>\n\n\n\n

When you get a home equity loan, you\u2019re getting a lump sum upfront. Then you make fixed payments throughout the life of the loan. You have a fixed interest rate as well. <\/p>\n\n\n\n

Home Equity Line of Credit<\/h2>\n\n\n\n
\"\"<\/a>
Ways To \u2018Celebrate\u2019 Financial Literacy Month (That Don\u2019t Cost Anything)<\/figcaption><\/figure>\n\n\n\n

A home equity line of credit is similar in some ways to a home equity loan, with a few key differences.<\/a><\/p>\n\n\n\n

A home equity line of credit is a credit line, and you have a pre-set spending limit that you can spend up to. In that way, it\u2019s similar to a credit card. There\u2019s a variable interest rate with a home equity line of credit, and payments aren\u2019t typically fixed. <\/p>\n\n\n\n

Like a home equity loan, a home equity line of credit is secured by your home. <\/p>\n\n\n\n

HELOCs often have a lower interest rate than many other types of loans<\/a>, and interest may be tax-deductible.\u00a0<\/p>\n\n\n\n

When you get a HELOC, and you pay your balance, then your available credit once again goes back up, so you can borrow as much or as little as you need as long as you\u2019re paying it. <\/p>\n\n\n\n

Home Improvement Loans<\/h2>\n\n\n\n
\"\"<\/a>
Home Improvement Loans: Everything You Need To Know<\/figcaption><\/figure>\n\n\n\n

Sometimes banks and credit unions will offer home improvement-specific loans. These are unsecured, and they\u2019re also available from non-traditional online lenders. You don\u2019t have to use your home as collateral since they are unsecured. <\/p>\n\n\n\n

Your interest rate and whether or not you qualify are based on your credit score, and you can usually get funding from these loans deposited into your account quickly if you\u2019re approved. <\/p>\n\n\n\n

Since home improvement and renovation loans aren\u2019t secured, then you\u2019ll probably end up paying more in interest. <\/p>\n\n\n\n

You also have to be careful about different fees the lender might charge, such as prepayment penalties. <\/p>\n\n\n\n

Credit Cards<\/h2>\n\n\n\n
\"\"<\/a>
Saving 101: How Do People Have Enough Money for a Down Payment?<\/figcaption><\/figure>\n\n\n\n

In some cases, using a credit card to pay for a home improvement project can be a good idea. In other instances, it can be a bad idea. <\/p>\n\n\n\n

First, you should only use a credit card if you can find an option with a 0% introductory APR. The longer that intro APR is available, the better. You also need to ensure that you can pay it off within that time. <\/p>\n\n\n\n

If you can find a credit card that will give you enough spending power and has no interest for a period of time, this can actually be the best option to pay for a renovation. <\/p>\n\n\n\n

This might not work for more expensive projects, however. It\u2019s also not a good idea if your credit card has a high interest rate. You\u2019ll probably pay a lot more than you would for a home equity loan or HELOC. <\/p>\n\n\n\n

Mortgage Refinancing<\/h2>\n\n\n\n
\"\"<\/a>
8 Easy Ways to Pay Off Your Mortgage<\/figcaption><\/figure>\n\n\n\n

Another option to pay for large-scale projects is mortgage refinancing<\/a>. When you refinance, you\u2019re replacing your existing mortgage and getting a new one. The idea is that your interest rate will be lower. You can also take out the difference between the old and new loan and then use that money to make improvements. This is called a cash-out refinance.\u00a0<\/p>\n\n\n\n

Refinancing has downsides to be aware of, though. First, you\u2019ll have to pay things like origination fees and closing costs. Also, you\u2019re going to be paying your loan for a longer period of time unless your new mortgage has a shorter term. <\/p>\n\n\n\n

The only reason you should refinance is if you can get a much lower interest rate than what you\u2019re currently paying.\u00a0These are a few of the big ways to pay for home improvements<\/a>, each of which has its own set of pros and cons to weigh in your personal financial situation.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you\u2019ve decided you\u2019re ready to do a home renovation or improvement project, you may be getting excited about the prospect of a fresh, new space.  That does beg one<\/p>\n","protected":false},"author":1,"featured_media":40949,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"footnotes":""},"categories":[14030,7232,5633],"tags":[5966,5930,13892,5895,14031,12436,440,14036,7741,13229,14033,12702,13064,14034,13613,118,11145,7691,10875,13063,14032,14035],"yoast_head":"\nHow Should You Pay for Home Renovations?<\/title>\n<meta name=\"description\" content=\"If you\u2019ve decided you\u2019re ready to do a home renovation or improvement project, you may be getting excited about the prospect of a 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