One may choose to renovate their home to increase their comfort and safety, to get better returns on investment, increase property value, or just restore the former glory of their home among other reasons. Whatever the reason; home renovations are most times a welcome development. The right renovations can increase the sale of your home and improve the overall functionality of the home.
There’s just one problem though; home renovations cost a lot of money and not everyone has that kind of money saved up. If you are planning to renovate your home and having trouble finding money for the project, here are five ingenious ways to fund your home renovations.
If you dream of renovating your home but just cannot find the money to do it, try the following suggestions to raise some money for your project.
1. Consider Alternative Financing Options
There are a couple of financing options available for people who want to embark on home renovations projects. These include:
i) Personal loans
Credit unions, banks, and even online lenders offer personal loan packages for people who want to renovate their homes. For instance, there are home improvement loans which are a type of unsecured personal loans offered by credit institutions. All you need is a good credit score to qualify for this type of loan, there’s no need for collateral. The downside to taking out this kind of loan is that the loan amounts are small and repayment timelines are tight.
ii) Home Equity Line of Credit (HELOC)
Unlike home improvement loans, taking out a home equity line of credit requires collateral. For HELOCs, this collateral has to be your home. To get a HELOC, you must have 15-20% equity in your home. And thanks to your collateral, you’ll get access to larger amounts of money and lower interest rates. However, like most loans that require collateral, if for any reason you’re unable to pay off your loan, your home will get foreclosed.
Alternatively, if you’re 62 years of age and have majority equity in your home, you can opt for a reverse mortgage and get paid monthly installments. Check out reverse mortgage reviews to see what options work best for you.
2. Focus on Renovations That Offer a High ROI
Whether you are renovating to spruce up your home or you flip houses for business, choose your home renovations carefully so that you only get to spend money on renovations that will bring the highest return on investment. Real estate experts suggest some profitable remodeling to include; kitchen remodels, garage door change, manufactured stone veneer, wood window replacement, fiber cement siding replacement, vinyl window replacement, wood deck addition, composite deck addition, and steel entry door replacement.
3. Create a Renovation Budget & Savings Plan
If you are not in a hurry to start your home renovation, creating a budget and gradually saving up for the project is certainly a good option. It may take a while to save up the large sum you may need for the project, but at least you wouldn’t have to worry about being in debt when the project is done.
There are three important steps to creating a home renovation budget. They include:
i) Prioritizing your Renovation needs
Make a list of the most important things that need to be done and the order in which you want them done.
ii) Creating a Comprehensive Remodeling Plan With Cost Estimates
Create a detailed plan that includes every single step of the remodeling process and then find out how much each of those steps would cost.
iii) Asking Contractors to Send in their Bids
When you’ve made your cost estimate, request a bid from a couple of contractors and look for one whose quote suits your budget the most.
When you are done making a budget, begin to put money aside regularly towards your upcoming renovation project.
4. Save Money on Home Renovation Costs
If you can find a little money to begin your home renovation project, you can manage to stretch this money to go a long way by saving money on home renovation costs whenever possible. Some ways to achieve this include:
i) DIY Some Parts of the Project
There are a couple of things you can do yourself during a renovation, so why bother paying a contractor for it. For instance, you could do some of the shopping yourself and also handle painting and minor jobs in the basement.
ii) Buy Used or Refurbished Items When Possible
Used items cost a lot less than brand new ones and some used items are almost as good as brand new. So it doesn’t hurt to look at the refurbished versions of items you may need in your home. This helps save money that can be invested in other parts of the project.
5. Government Loans
Save money on interests and insurance by taking out a government loan if you qualify for one. Sometimes government loans will let you borrow enough money for a home renovation even without having any equity in your home. However, when you’re using a government loan, all upgrades in your renovation plan are subject to government approval.