When it comes to renovating or building a new home, the biggest thing that hinders anyone from starting is the price tag. Renovations are not low-cost.
In fact, renovations are pricey, big-ticket items. For most, a renovation is the most expensive thing you will ever pay for – second only to the cost of your house.
So, how do you pay for a renovation? Are you doomed to simply fantasize about that new kitchen, killer outdoor living space and an owner’s suite to rival that of your favorite hotel spa?
The truth is – there are plenty of ways to finance your renovation. You know, beyond robbing a bank or winning the lottery.
Here are a few ways that you can utilize to finance your renovation project. Because a dream home shouldn’t be just that – a dream. Let’s make it a reality.
Refinance your Mortgage and Tap your Equity
If you suspect that you’re sitting on a good amount of equity in your home, you are actually sitting on the cash you need for your renovation. While refinancing can sound scary, intimidating, and all around like a bad idea, it actually helps you achieve a lower interest rate and payment. In addition, the option to cash out some of the equity that has been built up is a nice way to get a chunk of change.
Many times, homeowners have to sell the property in order to gain the equity. However, if you don’t have plans of giving up your property anytime soon, cashing out can provide up to 80% of your equity for things such as paying your child tuition, reducing debt, and updating your home.
Apply for a Reverse Mortgage
As we get older the chances of us living on a fixed income is very high. If you find yourself in this position, it can be difficult to obtain the money you need for home improvements, such as aging-in-place renovations or extra space. Even if you have a savings that you’ve acquired overtime, it can be uncomfortable pulling from that for projects such as renovations. Thankfully there is a more practical option.
A reverse mortgage is an option for those over the age of 62 and can help you get the money you need for those home improvements you’ve been wanting to do. While many people don’t know much about reverse mortgages, aside from the cheesy infomercials on TV that aren’t always legitimate, it is a safe way to obtain funds. Your mortgage lender can provide information and help you calculate what your reverse mortgage would look like to ensure that you are at 100% comfortable. In addition, they can walk you through the process, so you understand everything along the way. Much like refinancing your mortgage, reverse mortgages convert part of your equity into liquid cash. It is the perfect option for those who don’t necessarily have a lot of cash, but they do have a lot of equity
Lastly, there are no monthly payments with a reverse mortgage. It is not repaid until after you die or sell the house.
Grab a Zero Percent Interest Credit Card
If you’re considering a loan, this section is for you. Credit cards are probably one of the most used ways to finance home improvements. However, the issue is that the interest almost always makes the process much more costly. Is there a way to get around this? Yes. Some credit cards will feature a 0% interest on purchases for the first 12 to 18 months. This is a good option if you will be able to pay off the card in that time. In this scenario, it’s just like paying cash.
Bottom Line You should always be 100% proud of the home that you live in. Take the time to think about some of the available financing options and call us if you need any help along the way. We’re here to help you navigate every step of the home improvement process.