“How are we going to pay for this?”
We all have dreams of remodeling our homes. Why do you think HGTV is so popular? You may have already earmarked your tax refund for a special home renovation project like adding a deck or patio, replacing windows or doors.
But if you don’t have a nest egg tucked away, the first question to ask yourself as you daydream about home improvement projects is, “how will you pay for them?” Naturally, the best advice is to save your money in advance and avoid financing altogether. But who has time for that?
There’s no doubt that many home remodeling projects can give you a good return on investment. At the top of the list are doors, windows, decks, garage doors, and kitchen remodeling. But you can’t take advantage of that return on investment until you sell your home, which kind of defeats the purpose of remodeling your home in the first place — to enjoy the results with your friends and family members.
So, before you swing that sledgehammer, make sure you consider the cost. Is it truly worth your money and your “remodeling frustration” — mess, inconvenience, and revised timelines? If the answer is “yes,” there are a few financing options that may allow you to make the changes you desire without disrupting your finances.
1. Let your home pay for it. Use your home equity.
There are two ways to put the value of your home to work for you: A home equity line of credit (HELOC) or a home equity loan.
A HELOC borrows against the value of your home, usually up to 80 percent of your home’s value, minus the amount of your home loan. There is a draw period which can last about 10 years where you can spend the amount of the loan. The repayment period typically lasts for 15 years and payments increase as they include more principal on the loan.
A home equity loan also uses the equity of your home, but instead of a line of credit, you receive a lump sum of money. This is a good alternative if you don’t wish to refinance your mortgage, but the rate of interest may be higher.
You can compare the pros and cons of these options here.
2. Look for zeros in the mail. A zero percent credit card can be the answer.
You probably get credit card offers in your mail every week. And while it’s probably best not to charge a big project on a credit card with a high interest rate, you could look for introductory offers with a zero percent rate. Some of which allow up to 18 months with no interest. Divide the amount you need by the number of months with no interest and pay that amount faithfully each month.
Remember to use discipline with this method. Make sure you pay down the balance before the rate goes up. The jump in interest after the introductory period can be staggering.
3. Talk to your contractor about a short-term loan.
Nobody cares more about making sure you have what it takes to finance your remodeling job than your contractor. Many will offer to finance using a third-party lender or a bank loan. This financing usually has an initial interest-free period, much like using a credit card, so it is important to pay off the amount during this time. If it is not paid off, the interest charged reverts to the initial date of opening the account.
Be sure to research your contractor’s reputation along with the financing recommended before you start a project.
Window World can help you bring your home remodeling ideas to life and even help with financing. As the nation’s largest exterior home remodeler, we take pride in assisting our customers with free consultations and free quotes.
Talk to us about your window, entry door, siding, and shutter ideas. We can help you get the job done quickly, efficiently, and affordably. No muss – no fuss financing. No mess – no headache service.