There are many things you can do to make your home more flexible. You can change the wall color or move a wall by a few inches. One thing is certain, you will need money.
Your home remodel’s lifeblood is money. It starts at the beginning as a deposit and then it comes back at the end as the final payment. You’ll make more payments than you expected, and you’ll be required to make a few extra.
Learn how to finance your home remodel from liquid assets to equity and sweat equity.
Cash and liquid assets
- There are no interest, fees or charges
- You don’t have to rely on anyone.
- Funding speed is instantaneous. There’s no waiting to liquidate funds
There are no interest, fees or charges
You don’t have to rely on anyone.
Funding speed is instantaneous. There’s no waiting to liquidate funds
- Depletes reserves for emergencies
- Many people don’t have the money to pay for large projects like full-room remodels or additions.
Depletes reserves for emergencies
Many people don’t have the money to pay for large projects like full-room remodels or additions.
Savings, checking, savings, CDs and savings bonds close to maturity are the best options for money. Cash is the best and most convenient way to pay for your project. You are not obligated to any lender.
While liquid assets and cash are the best ways to fund your projects, they can be costly if you don’t have enough. You shouldn’t use your emergency funds to fund the second story.
You may be able to borrow a specific amount from some retirement accounts. You should check before borrowing.
- The labor is totally free
- You will be satisfied to have complete control over your project
The labor is totally free
You will be satisfied to have complete control over your project
- Materials are still available for purchase
- Hiring workers may be easier and cheaper than hiring them.
Materials are still available for purchase
Hiring workers may be easier and cheaper than hiring them.
Are there any family members or friends who are willing to help? They may be willing to help you save money on your renovations.
You will eventually accumulate some sweat equity, which can even be enjoyable. However, don’t stretch it if your capabilities aren’t clear.
Zero-Interest Home Remodeling Loans
- Subsidies that you don’t have to repay, such as subsidized interest on your loan
Subsidies that you don’t have to repay, such as subsidized interest on your loan
- The typical loan limit is between $25,000 to $50,000
- There are limitations on the types and styles of remodels that you can do
The typical loan limit is between $25,000 to $50,000
There are limitations on the types and styles of remodels that you can do
Although they are not free, the Home Improvement Program (or “HIP”) loans available from your county can be used to finance renovations. To preserve the local housing stock, municipalities and counties will subsist some or all of your interest on your remodeling loan.
If you take out a 5-year, $50,000 loan with an 8-percent interest rate and get subsidized 3 percent through HIP, your total interest savings will be $4,215.
The process of securing subsidies is complicated. This includes monitoring the project, a time frame for completion and a narrow definition of home-related activities. Swimming pools, hot tubs and decks are all excluded from funding.
HIPs may not be right for everyone. It is a great deal if you are eligible. Be aware of the limitations.
Grants and Rebates
Some states and counties offer special funding programs that homeowners can use to help them with their remodeling costs. These programs often offer grants loans that don’t have to repay if you remain in your home for a specific amount of time after the renovation. There may be other restrictions.
These programs are usually targeted at projects like energy efficiency upgrades and area-specific property improvement. These programs are available as a standalone financing option or in combination with other financing. These programs aren’t as common as you might think. They are rarely advertised. Before you start your project, it’s worth calling your local municipality to find out about any existing programs. This could help you save a lot of money.
Home Equity Loan (HELOC) or Line of Credit
- Personal loans and credit cards have lower interest rates
- For large projects such as additions, it is possible to get large sums of money.
Personal loans and credit cards have lower interest rates
For large projects such as additions, it is possible to get large sums of money.
- You will lose the equity you have accumulated if you continue to deplete it.
- Over-spending is tempting
You will lose the equity you have accumulated if you continue to deplete it.
Over-spending is tempting
A home equity loan is an excellent way to finance your home renovations. This is a way to borrow against your equity in your house. Equity is the value of your house less the amount you have to pay.
This loan is not for large projects like additions, driveways, siding, or pools.
- Money available quickly
- You can earn lucrative points and rewards by using certain cards to charge large home-related purchases
Money available quickly
You can earn lucrative points and rewards by using certain cards to charge large home-related purchases
- High fees and interest
- This false sense of security can give you the illusion that you have more than you really have.
High fees and interest
This false sense of security can give you the illusion that you have more than you really have.
A credit card that you pay off each month can be used to pay for home renovations. You can also use a zero interest card that you don’t have to pay back for six months or one year. Many homeowners combine a zero-interest card with another one to create a permanent but risky no-interest loan.