Are you thinking of improving your house this year? Good idea. As a homeowner, you have to keep your home in tip-top shape. By improving your home, you can make it look and feel better, more energy-efficient as well as increase its home value. But what are your options if you haven’t got enough cash to pay for the home improvement projects?
If you’re willing to wait, then saving is one option you might want to consider. With patience and a bit of change on how you handle your finances, you can fund your home improvement after saving enough cash. You can also use credit cards, but these can only fund limited home improvement projects. The interest fees might scare you off too.
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But if you’re keen on getting it done as soon as possible, then consider one of the following financing alternatives when funding your home improvement projects.
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Personal Loans
Personal loans usually take 5-7 years to repay. This is for people who are not comfortable with putting your home at risk, have got equity but is not enough for a home equity loan but has a good credit score. One of the cons, however, is the higher interest rates compared to home equity loans.
Cash Out Refinancing
For individuals who want to acquire a lump sum of cash, then a Cash Out Refinance Laredo is for you. You can tap in your equity provided you have enough to qualify for a mortgage with your home being the collateral. This is best for projects meant to improve your home value.
Home Equity Loans
Another way to put your home equity to work is by using it to fund your home renovation projects. Apply for a home equity loan, and your home will be the collateral, get approved and pay your lender in a span of 15 to 30 years.
Home Equity Lines Of Credit
This is another way of tapping into your home equity. You can borrow from your mortgage lender up to 80% of your home equity. With HELOCs, your lender will deposit the funds into your account which you can withdraw a specific amount anytime you need to use it. The monthly fees tend to be higher since you will repay the loan within 15 years.
Government Programs
You can also rely on government programs to help finance your home improvement. The following are the options you can choose from.
- FHA Title I – Only permanent home upgrades are allowed, and you can borrow up to $25,000 even without enough equity.
- FHA cash-out refinancing – This require enough home equity and a maximum Loan-To-Value Ratio of 85% to get approved.
- FHA 203k – The FHA limits the projects you can use the funds, but you can go beyond the 85% LTV ratio limit
- VA cash-out refinancing – This allows you to have 100% LTV of your home.
Good Read: What Is An FHA Title 1 Loan?
With the many options you’ve got in financing your home improvement project, it is essential to check the advantages and disadvantages of each option before making a final choice. How would you prefer to fund your home improvement projects this year?