Top Methods for Financing Your Remodel
When you want to make renovations to your home, there are 11 different ways that you can pay for them. The most obvious way is to pay cash, but that is not realistic for most homeowners. They’ll need a financing or borrowing option instead.
Below are the top 10 methods to pay for a home renovation project. Of course, financing will add more stress to your life than paying cash would. However, if you desperately need to renovate your home, then financing is better than nothing. If you don’t plan on keeping the home but are just fixing up to sell, then we would like to learn about your house and possibly buy it. If your just wanting to sell fast then letting us buy your Tulsa home may be a better deal than you realize.
1) Mortgage Refinancing
Refinance your home loan is a great option for coming up with renovation money quickly.
2) HELOC (Home Equity Line of Credit)
Does your home have equity? If so, then you could get approved for a Home Equity Line of Credit. This type of loan is a little different than a Home Equity Loan because it works more like a standard credit card. There is a flexible interest rate which is only applied to the amount of equity that you spend. The payments on the loan are just like the payments you would make on a credit card. Since it has a flexible interest rate, the rate could increase or decrease in the future.
3) Home Equity Loan
This type of home equity loan comes with a fixed interest rate on a set loan amount. In other words, you are charged a fixed interest rate on the entire loan amount rather than the equity that you spend. Usually, better interest rates are available with a Home Equity Loan versus a HELOC loan.
4) Construction Loan
When you’re developing a house, you’ll need a construction loan to pay for the construction costs or any major renovations being done. Renovations are considered “major” if their cost is higher than the value of your home’s equity. If that is the case with your renovation project, then you may be entitled to a construction loan to pay for it. However, there are a lot of strict requirements to get approved for this kind of loan. In many cases, you can only get approved for a construction loan after you’ve already started the project and have advanced to a certain stage of it.
Construction loans also work great for investment properties. There are many options available if you are wanting to finance real estate.
5) Credit Cards
If you only have small renovations to make, then you should pay for them with a credit card. For instance, you can purchase construction materials with a credit card, but don’t pay your contractors with it. Also, remember that if you’re currently renting an apartment, whether that’s in Tulsa or another expensive city like Denver, paying rent via credit card can be a smart practice as well.
Do you have a 401K? If so, then you can take out a loan on the money in it and pay it back over the next 5 years. Your employer will deduct the monthly payments from your future paychecks. Just be prepared to pay back the entire balance of the loan if you quit or lose your job.
7) Limited 203(K)
Loan – The Federal Housing Administration offers Limited 203(k) loans to homeowners or buyers. This loan will provide them with up to $35,000 worth of financing for home renovations. The FHA insures the loan, which offers a low-interest rate and long-term payment plan.
8) FHA Title 1 Loan
You can receive up to $25,000 with a Title 1 Loan. The term of the loan can go as high as 20 years. Home equity is not necessary to get approved for the loan either. Be prepared to fill out a ton of paperwork. Also, the renovations or repairs that you make need to last a long time. Within 20 years, you could end up with more repairs needed if you don’t spend the loan wisely right now.
9) Reverse Mortgage
A reverse mortgage is available to homeowners who are 62 years of age or older. If you want to retire in your home and have no plans of leaving, then a reverse mortgage is a great loan option. If your home has equity, you can exchange the equity for cash through a bank. The best part is that you don’t need to make payments on the loan until you move or sell your home. That is why it is a better option for retirees who want to stay where they are.
10) Contractor Financing
Contractors often have connections with financiers. Ask your contractor if they can arrange to have your project financed through one of their connections. If all the previous options have failed, then let this be your last resort.
Of course all these options are great if you plan on keeping the house long term, but if your in a situation where you need to sell your house fast in Tulsa then you need to either get it on the market today or call us and see if we can help you by buying it. Maybe it’s a house that need a ton of rehab. Sometimes based on location and how much you already owe on it, the money spent on rehabbing may not be worth it. In that case getting it sold quickly is key. Then you can take that money and use it for a property you do want, pay off bills, a vacation, or whatever you need at that point in your life.