Home Improvement Financing

Thinking of adding a new room to your home? Want to change those old windows? How about the doors? Do you want to renovate your kitchen or your living room maybe? Unfortunately, for many of us, making these types of improvements to our homes can work out to be a very costly affair, and in these financially troubling times, these jobs tend to be continuously pushed back. If you really want to make these types of changes to your home, but you do not have the budget, home improvements financing is the answer to your prayers. Before opting for this type of financing though there are a few things you should ask yourself such as how long the whole project will be, how much is the total cost, and whether you can afford it or not. If you have already decided on getting home improvements financing, you should look at the interest rates -whether they are affordable and can fit your monthly budget. Home improvements financing can come in many forms, you can get a personal loan or you can even borrow from your 401(k), your life insurance, or maybe get a contractor loan or a home equity loan. There is no one best plan for every homeowner, if you have determined that your home improvement only costs a few hundred dollars just pull out your credit card. Because if you are opting for home improvements financing and will only need just $500 for example, the paperwork is not worth the hassle. Using plastic is more expensive, yes, but you will be able to pay for it on a monthly installment anyway. If your project is a large one, you can tap into your homes equity for your financing needs. This is the most low-cost vehicle for home improvements financing especially if you compare it to personal loans or personal line of credit you get from the bank. Home improvement financing will not be put to waste because it puts your property to a higher value if in a few years time you decide to sell. If you do not want to loan any money, and have the needed amount for your plans then use cash. After all, cash is the best way to go with everything because you will not owe anything from anyone at all. Borrowing from your 402(k) is another option. This is relatively painless because it is your money. There will be no credit checks whatsoever and there is less lag time involved. Apart from that, the rates are very low.

Home Improvement Financing 101

You’ve decided to spruce up the homestead with some needed improvements. Fantastic. Now here lies the rub, how are you going to find home improvement financing?

Let’s face it, kitchen floors and new window panes don’t grow on trees. Even though home improvements are an investment that will make you money in the long run, finding the financing you need now can be difficult, and not getting an adequate amount of funding for your projects can lead to compromises in quality that you may later regret.

Homeowners have a variety of options when it comes to finding the right bank. They can borrow against the equity in their homes and various federal loan programs also exist for borrowers. Here’s a few options you may what to consider:

Mortgage refinancing: Now is the time to take advantage of historically low interest rates by refinancing your mortgage to pay for home improvements. You can refinance your mortgage and borrow money against the equity you have in your home. Some banks even offer loans that allow you to borrow more money up front by adding the value of the planned improvement to your equity. Refinancing your mortgage for home improvement purposes is a good deal because you’ll have the convenience of just one home loan and monthly payment.

Home equity loans: These loans, also known as second mortgages, lets homeowners borrow money by leveraging the equity in their homes. They’re popular among folks looking for financing because homeowners are able to deduct the interest from their federal taxes.

Federal Title I loans: If you don’t have much equity in your home, you may qualify for a Title I loan. These federally-backed loans offer negotiable interest rates and can be tapped for about $25,000. The loans can only be used to pay for essentials however, such as improvements made necessary by a medical condition, not luxuries like swimming pools.

One method of home improvement financing you want to avoid is financing through a contractor. These loans often are made by sub-prime lenders and come with hidden fees. Also, getting financing through your contractor puts you in a poor bargaining position with him when it comes to getting a quote for your home improvement project. When hiring a contractor, it’s best to have your budget and finance already prepared to ensure the best deal.

Home ownership is like any other investment – you’ve got to spend money to make money. But to get the most out of your home investment, make sure you get your home improvement financing right. Borrow from reputable lenders and don’t overextend yourself.