You want your kitchen remodeled, your roof redone, or solar panels installed. Home improvements on that scale can get pricey. And if you don’t have the money up-front, they may feel out of reach or impossible. You already saved up the money to buy a house — now you have to figure out how to fix it, too? It hardly seems fair, especially when the benefits of making those upgrades are about more than aesthetics.
Improving your property makes it safer to live in, increases the property value, and elevates your community. So when you think about it, you’re providing a service when you renovate your home. Fortunately, many businesses, lenders, and even government programs agree, and they want to help. When it comes to making home improvement affordable, you have options. All you have to do is figure out which one makes the most sense for your situation.
The first, and often easiest, way to get home improvements done quickly and affordably is to go directly through the businesses offering them. If you have been researching solar installation, for example, you will find that some companies allow you to lease rather than buy panels. Others provide financing, as do kitchen and bathroom stores and home improvement retailers. Many companies require no credit checks or income verification and offer long-term payment plans.
The key to finding these deals is to work directly with local businesses and do your research. The internet is a beautiful place for helping you find the best ways to get what you want on your terms. It might take some digging — in fact it probably will, but it’s worth it. When you find a company willing to work with you, through leasing, financing, or large discounts, reach out. Make sure you understand the terms and the work they’ll do for you, then make a deal!
If the improvements you have in mind don’t allow for these types of deals, your next consideration might be a personal home improvement loan. Such loans are a step up from a credit card. It is not secured by the equity in your home, and you may be able to borrow up to $100,000.
Personal loans are available from private lenders, banks, or credit unions. You’ll get a fixed interest rate, and the interest rate and loan amount are based on your credit score. If you have a high credit score, you can expect a fair deal.
The advantages of this type of loan are that it’s not secured by your property, and you don’t need to have accrued equity. If anything were to happen to prevent you from repaying it, your home would be safe from foreclosure. For borrowers with little to no equity built up or in a market down-swing, this option could be ideal.
However, because the loan is not secured by your home, the interest rate will be relatively high. Naturally, the higher the interest rate, the harder that loan will be to pay back. And with a low credit score, you might not even get approved. You’ll have to weigh the upsides and downsides before pursuing this kind of loan.
If you don’t have great credit or you want a lower interest rate, a secured home loan may be better for you. With equity in your home, you have three options. You can refinance and take cash out, you can take out a home equity loan, or you can get a home equity line of credit. In each instance, your credit score will affect your rate, and your home is used as collateral for the loan. Still, as long as you can make your monthly payments, you shouldn’t have anything to worry about.
With each of these loans, there are pros and cons. For starters, it only makes sense to refinance your mortgage if you’ll get a better interest rate than what you have now. Otherwise, your monthly mortgage payment could skyrocket.
A home equity loan is nice because you’ll get a fixed interest rate and a separate monthly payment. The downside is you have to decide how much to take out all at once.
The home equity line of credit is a good option because you only pay for what you take out, like a credit card. But the interest rates are variable, and you’ll have to pay appraisal costs. With each loan type, you’ll have to decide which mix of benefits and drawbacks makes the most sense for you.
Each of those loans can work for different situations, but a government-backed loan is ideal for those with few resources. If you have to take a loan out, getting one subsidized by the government can be helpful. A government-backed renovation loan will be a lower-cost option if you qualify for an available program. The benefits of these programs are a low interest rate and a longer repayment term.
The three most common government-backed home improvement loans are offered through HUD, the VA, and the USDA. The HUD Title I program offers up to $25,000 for 20 years to those substantially improving their property. The VA cash-out refinance option is for veterans, offering low interest rates and negligible credit requirements. The USDA program offers up to $40,000 in loans for those with a very low income in rural areas to make repairs or improvements. Depending on your situation, any of them could offer an affordable way to make the upgrades you envision.
As with any decision in life, it is up to you to carefully think through what options work best for you. Obviously, you’ll want to capitalize on any help you can get, whether it be through a government program or vendor discount. Regardless of which financing route you choose, remember that improving your home really is a big-picture issue. Yes, you get what you want, but you’re also serving your community and any future buyers. It’s a win/win/win.