Options For Financing A Home Improvement Project
Apart from buying a new house or car, home improvement projects will be one of a homeowner's largest expenses by far. If you want to complete a project and don't have the cash on hand, you have a few options available to fund the project.
Good Old Fashioned Savings
If the project isn't critical, such as a broken air conditioner or refrigerator, you might want to wait until you can set the cost of the project aside. The trick is to keep yourself from spending the money on other things.
Various banks and credit unions offer savings accounts that you can make ongoing or scheduled deposits into but that don't allow any withdrawals until you meet your savings goal. You can also buy CDs worth a few hundred dollars per month and schedule them all to mature at the same time.
Put it On a Credit Card
Credit cards can be great for small or mid-sized projects. You could take advantage of an introductory 0% interest offer, and you might even get cash back or airline miles. The rewards alone could be huge if you combine a big budget project with a signup bonus offer.
The catch is to make sure you can pay the credit card off on time. The interest rate on a card with a good intro offer could be 20 percent or higher. With some store cards, you might even owe interest all the way back to the original date of purchase if you don't pay the credit card offer before the initial offer ends.
Get a Personal Loan
Personal loans are loans that don't require any specific purpose to receive. You can usually request anywhere from a few thousand dollars to about the cost of a new car, depending on your credit.
The catch to personal loans is that they carry some of the highest interest rates. Since you aren't telling the bank why you need the money and aren't securing the loan with anything, the bank takes on extra risk and charges you for it.
Take Out a Home Equity Loan
Home equity loans work almost the same way as mortgages. They are secured by the value of your home, so the limit is the equity you hold in your home.
Because home equity loans are secured by your home, the interest rates are incredibly low. This makes them one of the most common financing options for home improvement projects.
To learn more about home loans, contact a local lender today.
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