How To Finance Your Home Improvement Project
We understand that the first step towards the renovation of any kind is making sure you have the financing in place to get the job you want to be done.
Whether it’s the renovation of an entire house or just a bathroom, it can be a heavy financial burden. So today we have 5 guidelines that you can follow to help make it easier to take that first step.
Here at MOG Improvement Services, we strive to be the best home improvement experience on earth and we do that by offering the best information for homeowners to make the best decision.
So let’s get started with our list.
#1 Determine Whether It’s Worth It
It depends on the outcome that you’re looking for to determine the strategy you ultimately choose. Most of the houses that you own as a homeowner, are a liability and you’re going to be spending money. If it’s long-term than financing makes sense. If short-term than probably not. If it’s a kitchen, bathroom, things that bring a lot of home market value than it would definitely be worth it. Most people put money in their house when they’re trying to sell.
#2 Home Equity
This is by far the best because the rate is so low and based on an asset. Most banks pre-qualify you in order to get an equity line and they give you a checkbook where you can write whatever amount you need up to a certain point. It’s at most, free money to get done what you need to get done right now. The equity is the amount that you owe in comparison to the market value. Small banks, community banks, and credit unions are really good options to obtain a home equity loan.
#3 Ask Your Contractor For A Loan
Most contractors don’t provide financing. Period. If you find one that does, they may offer a loan for, say, 12 to 18 months. Typically this is done through a third-party lender.
Having a contractor also be your lender means you’ll need to vet him in both roles. Check whether there are complaints about the company’s financing deals with your state’s office of consumer affairs and the Better Business Bureau.
Think as an investor and you’ll see that it’s a numbers game and you’ll see how to not just be able to pay back the loan but maybe even profit from it. When you finance and get a better return, it’s free money. If it doesn’t appreciate, than there’s no point. Getting money won’t be as a big a problem as you’d think, it’s really what you do with the money matters most.
#4 Use A Zero Percent Credit Card
You can use it but don’t use it for very long. Just the specific period of time needed and then pay it off shortly after. If you do any different, you’re shooting yourself in the foot. Depending on the terms it’s a good option. Say you want a new bathroom, you use the credit card and the job finishes in two weeks and you pay it off. And since it’s a credit card you can always dispute charges with money that isn’t yours in case something goes wrong. It depends on the card but most are between 30 and 90 days to pay back what you owe.
#5 Look Into A Personal Loan
Personal loans are at different rates and based on credit. With a personal loan you have to be the warranter on it, which doesn’t mean you shouldn’t do it but we prefer that people protect themselves. Usually shorter terms have bigger rates. Always check the specific terms of each loan, sometimes the higher loans have different rates. Make sure to always ask questions at your bank. If you don’t ask the answer is no, and if you ask it’s amazing how many doors you’ll open.
Now that you that have this info, really take the time to do some research and see which strategy would work best for you. As we said, it depends on the person and on the situation so don’t worry about comparing yourself to what your neighbor’s done.
At MOG we have the connections and can point you in the right direction if you ever need financing in the future for a home project. Remember to start thinking like an investor and when you start to understand the numbers game, you can have the confidence to make decisions that you wouldn’t have made otherwise. Take care and we’ll see you next week.
Watch MOG’s Home Renovation Made Simple show latest episode about home improvement financing: