How to Finance Home Improvement
Home improvement, whether a small renovation or a major rehab, can help increase the value and quality of your home. There are many ways to improve your home, from adding a new bathroom to finishing an unfinished space. In some cases, it makes sense to pay for it all at once, while others make more sense to save for it over a period of time. Regardless of what you choose, it’s important to find a plan that will give you the best bang for your buck.
Before starting any project, it’s important to get a thorough list of all the work that needs to be done. This list can help you negotiate with a contractor and ensure that you’re getting a fair price. It will also enable you to compare prices from multiple contractors. If you have a good credit rating, you may be able to secure a loan for your project without paying interest for up to a year.
Another way to finance your project is through a home equity loan. These loans are secured by the equity in your home and come with a fixed monthly payment. They can be more expensive than personal loans, however. If you have enough equity in your home, you can borrow up to 85% of its value. The loan can be used to cover the cost of repairs and upgrades. If you don’t have enough equity, you can look into a more affordable FHA loan.
If you do decide to take out a home equity loan, keep in mind that the amount you’re eligible to borrow will vary based on your state and municipality. In addition to the monthly payment, you’ll be responsible for closing costs and origination fees. If you’re not interested in taking out a loan, you may be able to save money by doing the work yourself.
Another way to finance your home improvement project is through a personal loan. These are a little more costly than a home equity loan, but they don’t require a second mortgage, and you can use the money as you need it. Most lenders will offer an introductory 0% APR period on loans that last at least one year. The APR rates range from 16% to 24%. These loans are a great option for small or minimal improvements, such as painting your home or buying a new appliance. They do have some limitations, however, so you will need to shop around before committing.
If you’re considering a home improvement project that requires the services of a contractor, you must be sure that he or she is licensed. New York City requires all home improvement contractors to have a license. You can also check to see if a contractor has insurance.
You should always ask for references and be sure to ask a contractor to provide you with a contract. The contract should detail all of the work that is to be performed, the timeline, and a payment schedule. If the contractor fails to meet these requirements, you may be able to sue for actual damages or a $500 penalty.