If you plan to convert a space in your home or, start a new renovation, or if you plan to build on an addition, you need to look at your options for financing. You have choices for how you’ll afford a new home renovation project, and each comes with its own advantages and disadvantages. Let’s take a look at how you can finance your new family room, bathroom, or kitchen.
This financial option is probably not ideal. Your interest rate will be high on a new credit card and you could overburden you budget. If you are considering using a credit card, think about simply saving up the cash first. Pay yourself the money you would have sent to the credit card company each month. You can’t beat zero interest. It might take longer, but it could help your overall budget more.
The bank that holds your mortgage may loan you money to put more value into your home. You should be prepared to explain how the new additions may add value to the property. Put in a home security package at the same time, and the bank may see this as a wise investment.
Make sure you include all the costs of adding a family room. You don’t want to get halfway through and find out you have used up all the loan money.
Title 1 Property Improvement Loan
Banks make Title 1 loans. The reason they like to make this type of loan is the Federal Housing Authority (FHA) insures the lender against losses. You can use a Title 1 loan to make improvements that will make your home more livable. If you hire a contractor, the loan will pay the contractor’s fees. However, you can go the do-it-yourself route and use the funds for materials.
The latest trend in financing is peer-to-peer lending. Such lenders are not banks. Instead, they pool individual investor’s money and make a loan to you. When you pay back the loan, the investors make money from the interest. These types of loans can be quick to get and may be easier to qualify for. Interest rates can be high, so make sure you know what you are getting into.
Some companies that do home improvements will finance the project. Ask your contractor if any financing is available. Even third party companies can sometimes help this way. Your security provider might offer home security for families on a discount depending on your situation and overall cost. Just ask and see what savings can add up.
Adding a family room or other type of home renovation can be an exciting project. But don’t let the excitement cloud your judgment. Seek the best financing for your needs. Review all your options, know the complete costs of both the remodeling and the financing, and review your monthly budget. Once you have done all that, enjoy your new family room.