When doing any kind of project, especially renovation, there’s one burning question that comes to mind. How can I afford this and how do I do this in a manageable budget? You obviously don’t want to go overboard but you don’t want to go cheap as well. The best solution is somewhere in the middle as your budget allows.
The first question you should probably be asking yourself is if you’re going to be relocating or renovating. Are you willing to make a move and purchase a brand new home? Starting all over can be scary for a lot of people and a heck of a lot more expensive than simply renovating your current home. When you do some research into how much it would cost you to renovate your home over relocating, you’ll see just how many benefits there are to renovation over relocating.
However, not everyone should renovate their home. Not everyone is cut out for it and it doesn’t help every home. If you’re in a bad neighborhood where there’s no market for pricey homes, you’re more than likely wasting your time and money.
- Will these renovations add any kind of significant value to my home?
- Will these renovations improve my standard of living in my home or am I happy with the standard of living currently?
- Am I in need of emergency repairs or an extension to the home?
When you need to finance a home renovation project, you have quite a few options. You have your credit providers and some lenders but you’ll want to note that they do have some restrictions. They don’t just give you a bunch of money for home renovation, most of the time they limit money given to people who are:
- Adding another room to their home as an addition
- Updating or remodeling the bathroom
- Adding a patio or an area outside for recreational use
- Installing a swimming pool, provided you have permission from the city
- Expanding your current garage from a single car garage to a double car garage
So, what about the current methods of finance? What’s available and what options are there for renovations?
First, you have what’s known as a home equity loan. For this type of loan, you simply borrow the money that your current home value is worth and usually pay back the loan plus some interest. This varies from state to state so make sure to check up on that.
Second, you have what’s known as a personal loan. I wouldn’t personally recommend this but if you don’t currently have anything you could use as equity in your home, this might be the option for you. However, the personal interest rate is going to be far higher than equity loans because the lender knows you have no equity or nothing of value and they want to get as much money as possible back.
Consult with a bank or your accountant before going into home renovation and applying for any kind of financing.