How to Pay for a Home Renovation
Figuring out how to pay for a home renovation can be challenging. The costs can add up quickly. You immediately start looking for different options to pay for the renovations that you need. This bill will likely be several thousand dollars. Therefore, locating the appropriate financing can save you money. Here are a few options to pay for your home renovation.
Using your home equity to finance the project is generally one of the smartest options, if it is available for you. With a home equity loan, you are simply borrowing against the money that you have already paid on the house. If you have been in your house for several years, you will most likely have accumulated some equity. When you borrow against it, you can typically get a good interest rate and a long repayment term. Perhaps the best thing about using home equity is that the interest paid on the loan is tax deductible. Therefore, you can save money on the loan itself and on your taxes.
The main options that you have to get your home equity are a home equity loan and a home equity line of credit. A loan is a set amount of money given to you with a set repayment period. You will pay the same amount of money each month for the entire term of the loan. With a home equity line of credit, you will be able to borrow exactly what you want when you want it. Then you make payments on the debt to get back to the starting point. This is a little more flexible than a loan as you simply have the credit line there and write checks to access the money.
Another option is to use in-house financing with the stores you plan to buy from. If you are doing an extensive renovation project, you will usually have to shop at a few different places. You may need to buy flooring, windows, cabinets, and many other things. If you shop at the big box stores, they all have financing plans such as "12 months no payments, no interest". This will give you a year of free interest to pay everything off. This is only a good plan if you can realistically pay off the bill in less than a year. If you go over the year, it is basically like having a credit card with high interest.
If you shop at specialty retailers, they will often have some even more attractive finance terms. Sometimes you will see offers like "No Interest for 4 Years" being thrown around. If you can take advantage of a plan like that, it can save you a lot of money and give you time to pay it off. To get access to these financing terms, you will have to have a good credit score and sufficient income to repay the debt.