Affordable Ways to Upgrade and Renovate
9-HOT-Tips to Finance Home Improvement Projects
Attention Homeowners, does this sound like you?
You are looking for affordable ways to upgrade and renovate your house. Now, you need to figure out the money. Whether you’re looking to install an outdoor kitchen or finish the tile in your bathroom, my team put together 9-HOT-Tips to finance your home improvement projects to help spark ideas. Let’s get cooking on this article!
- HELOC (Home Equity Line of Credit)
- Put it on a 0% Credit Card
- Take out a personal loan
- Refinance Your Home and Use the Equity Cash
- HUD Title 1 Property Improvement Loan
- Local Subsidy
Need help! Who do I hire for minor home renovations? A handyperson, contractor, architect? I’m having a hard time visualizing design option. I want new windows, doors, landscaping, and stucco paint. Who does one hire for such a thing? ~ O.P.
O.P. is having a troublesome time knowing where to start with her home upgrades. Hiring a good contractor with a reputable business is imperative. The last thing anyone including O.P. wants is to hire a scam artist. There have been cases where the project managers abandon a job leaving homeowners in hot water. We recommend hiring only bonded professionals with excellent reviews. Now on to the financing tips.
A HELOC Loan Provides an Affordable Way to Upgrade or Renovate
HELOC or Home Equity Line of Credit is perhaps the most common form of financing home improvement projects. In the event you default, they will use your home as collateral to pay back the loan. HELOCs have a variable interest rate in most cases. The fluctuating market makes it imperative to understand the terms of any loan which eases stress. However, they are one way of getting those add-ons that are affordable when the payments stretch to the qualifying term.
Use a 0% Interest Rate Credit Card for ‘No-Stress’ Fixer Upper Projects
Next, healthy FICO scores can qualify for a credit card with 0% interest, this might be the way to go for homeowners wanting to ‘Fixer upper.’ The drawback is the smaller limit. Credit cards that don’t have interest rates are what you need when getting the house ready to sell; making this a suitable solution. If you’re looking to do the upgrades to sell the home, the credit limit may not matter as you can pay it off rather fast when you sell. If you’re staying in one place for a spell, then a zero percent card allows you to pay it back over a stretch of time without accruing interest and you are continuing to build credit.
Use Caution When Taking Out a Personal Loan for Home Improvements
Taking out a personal loan is yet another way to finance a home project. Most banks will cap out at $100,000 for an unsecured personal loan. The best part is you won’t have to use your house as collateral while making those payments. These lines of credit do include high interest rates to 35% but offer fixed payments. Speak to a loan officer or someone at your credit union to discuss the options which will be best for you.
Avoid Hefty Payments by D.I.Y.
Do-it-Yourself is another way of avoiding those hefty payments. But you will incur cost over time. Save money by stretching a project out over time or plan on being a weekend warrior. The hours it takes to do many of these home improvements is costly. Either way, everyone pays in the end. Doing the projects yourself will inevitably save you thousands if not hundreds. YouTube is your greatest friend, but we recommend getting quotes from a contractor before you begin.
No Better Time than NOW to Refinance and Use Equity
Refinancing a home has been a HOT topic since the beginning of time. The less you owe on your home, the more cash you can get for those renovations. Remember, banks and credit unions allow up to 80% and will need to have a decent credit score to qualify. Things like debt-to-income ratio are important to consider. The good news, rates are historically low. Rates this low are making an optimum time to do a re-fi.
First Time Buyers Should Consider HUD Title 1 for Renovations
A HUD Title 1 Property Improvement Loan is out there for the risky borrowers and first-time buyers. Maximum ballpark figure is less than other loans capping out at $25,000. Also, luxury upgrades are rarely qualify. First time home buyers may qualify for these type of loans if the house is less than livable. Additionally, debt-to-income ratio shouldn’t go over 45% to get upgrades done. Be sure to ask your bank or the financial institution which is best option.
FHA or 203 (k) is Good for Short Term
FHA or 203 (k) loan is yet another way for homeowners to get those upgrades done if you’re seeking to buy. These loans are on reserve specifically for renovating where the home improvement projects require completion within 6-months. FHA is part of HUD operating differently where you’ll need to know how they work. Speaking with a mortgage professional is a best practice we highly recommend. Also, if you’re looking to buy within the next few months, getting a pre-qualification is a good idea. We can certainly direct you to the parties for these types of opportunities prior to buying.
Trials and Tribulations for Local Subsidies
The local subsidies have its trials. These are government funding which can be affordable, however the feds will not always allow glamour projects and keep their eye on your progress since it is their money. Improvements leading to property value are excellent options for Larimer County residents. Check with the Loveland Housing Authority for real-time updates.
Using Your 401k Can be Risky for Home Improvement
Last on the list is your 401k. Make this a resource if you are saving for retirement. In addition, using your 401k can be risky. For example, if you plan on leaving your current employer, they will force you to pay back the borrowed amount within a few months. There are also taxes and penalties to consider. No foreseeable hiccups along the way? Go for it!
There you have it, folks! The best 9-ways to finance or fund your home improvement projects. We recommend:
Get a few quotes.
Speaking with a loan officer or credit union to qualify.
Hit The Home Depot or Lowe’s for ideas.
For further questions on upgrading before listing your home for sale, reach out. We are here to help you solve any problems that arise.
What is my home worth? Check it out here: What’s My Home Worth – Real Estate In Northern Colorado