Financing Renovations: Different Ways To Pay For Home Remodeling

Home renovation can be an expensive process but it’s still recommended especially because of the different benefits it gives the homeowners. This includes increase in the resale value of your home, better quality of life, and sometimes, lesser utility bills. Although many aspects about home renovation are flexible, one thing is certain – you’ll need to money to make it happen.

So to help you out, we’ve prepared interesting facts about the different home renovation financing options you can choose to help you plan your remodeling realistically.

Cash. This pertains to the most readily available money you have like in your savings account or savings bonds near maturity. The good thing with such option is there are certainly no fees, extra charges or interest. However, this will surely deplete any reserves you may have and sadly, not all individuals have a lot of cash available to spend for home renovation. Therefore, cash remains the best way to finance a home renovation project, especially if it’s just a minor project, but only if you’ve got plenty to spare.

Credit Card. If you’ve got an existing credit card with enough credit limit to spend for your home remodeling project, lucky for you since you can now skip the hassle of waiting for a loan approval. There are credit cards that you pay off at the end of every month while there are those zero-interest cards that you don’t need to pay off for six months or a year. The advantages of such option include money being quickly available and other cards accumulate points or rewards, which you can later on enjoy. However, you need to be careful about the high interest rates and fees, plus it actually gives you a false sense of security that you have more money than what you actually have.

Bank Loans. This option is considered the most straightforward way to financing a renovation. You can do fixed repayments, which will be withdrawn from your bank account at regular intervals – weekly, biweekly or monthly. If you’ll choose this option, you’re encouraged to do weekly payments as it can reduce the amount a lot quicker than a single monthly payment without costing you a cent.

Personal Loan. With this financing option, you will pay regular payments of principal and interest for a certain time frame, usually one to five years. You’ll also have the option of a fixed or a variable interest rate for the term of your loan, which is typically lower than that of the credit card.

Home Equity Loan. This option is the traditional way to finance a home remodeling project wherein your home’s value less the cost of the mortgage is used as a collateral or security. The advantages of this option include the fact that you can get a huge amount of money for large projects and it comes with lower interest rates compared to personal loans and credit cards. Sadly, if you continue to deplete your equity, you also lessen the sum you will get once you sell your house. Plus, you are pushed to spend on unnecessary things unrelated to the renovation because of the huge amount of money available.

Mortgage refinancing. This option allows you to spread your repayment over a long period of item at mortgage interest rates usually lower than credit cards or personal loans especially during funding your major home renovations. It also allows you to borrow up to 80% of the appraised value of your home but you’ll have to spend for legal and appraisal fees as part of the initial set-up costs.

Home Remodeling Projects: What To Expect

If it’s your first time to take on a remodeling project, it’s normal to feel a little anxiety. You certainly have a lot of questions in mind like the cost, the amount of time necessary to get the job done, and the problems that might arise in between. Knowing what to expect will help lessen your fears while allowing you to be more prepared in handling anything that may come. Below are some things you can expect during your home remodeling projects.

Dirt and dust. There are a few ways to control dust and dirt from accumulating in non-construction areas of your home. You can use a compression-fit temporary wall to close off the construction area from other parts of your home. Another way is running an air filtering system that can pull the dust from the air. Otherwise, you can also hang a plastic sheet over the doorways that lead to the construction area, the cabinets and pantry doors too to keep the dust and dirt out of your bard.

Noise. This is something you couldn’t control unlike dirt and dust. Noise will become incessant therefore, if you want to sleep, you better find another place. And unless your office or working area is far from home, don’t consider working from home too because you certainly won’t be able to concentrate.

Other items can get broken. Even if the items aren’t found in the area where your remodeling project is taking place, they are still prone to getting damaged. There will be accidents but there are a few things you can do to prevent this from happening. For instance, you can move your valuable things out of the house. You can ask your other family members, neighbors or friends to keep these items while the remodeling is on going. Remove picture frames hanged on the wall too especially those opposite the wall of the room being working on.

Loss of privacy. A lot of your contractor’s workers will be in your home for a few weeks or months to do complete your home improvement project. Therefore, you have to learn to compromise, as this is inevitable while the project is on going.

The project might take longer that what you have estimated. Before the project starts, you will be discussing a few things with your contractor and one of which is a rough estimate of the project’s completion. Once you’ve determined this, add at least 15 percent to your estimated time because you might lose a day to rain, the materials might get delivered late, or some areas of the project might need to be re-done.

5 Don’ts In Home Remodeling

A lot of homeowners have gone through different home remodeling projects with various contractors. From such experiences, they’ve learned lessons they want to share to other homeowners so they can avoid committing the same mistakes as they have a negative impact on the home renovation.

So what are those things that can hurt your home remodeling project?

Changing your mind too much is one thing!

Although this is inevitable, just remember that changing your mind too often can have negative effects on the project. This means an increase in total costs, an extension of the project’s timeline and the alteration in the scheduling of the tasks.

Purchasing your own materials.

We know you’re thinking that this is an obvious way to save you a lot of money but actually, your contractor may get a better price than you did. Therefore, even after the markup, you might be paying almost the same price.

Working on a project without emergency funds is a big no-no.

It’s uncommon for homeowners to set a realistic budget for a project. Sometimes, a project eats a part of your emergency funds however; it’s never advisable to stretch your budget to the point of consuming your contingency funds just to get the job done. Plan ahead of time and if the budget isn’t enough, don’t push through with the project for the mean time.

Living in the property.

Homeowners usually ignore this rule for a good reason. Of course, remodelling is already expensive and moving out while the remodelling is going on just adds to your expenses. But if you can’t move out totally, try to spend some time away in a clean and comfortable place especially if you can’t handle the stress of coming home to a messy environment.

Working without a design.

Never start a project without a design because this will eventually lead to a series of problems once the remodelling project starts. You’ll need the help of interior designers, architects and talented home builders to come up with a functional and satisfactory home remodelling project.

Just follow these essential guide and we promise you, you don’t need to lose your sanity while completing your home remodelling project.