Outdated kitchen. Overrun backyard. Unusable basement space. If you have a home renovation project on the mind, the first thing you have to consider is how you are going to finance it. Here are the most common options to make your dreams become a reality through five sources to finance your home renovation.
First of all, using cash is the most straightforward financing option. You just save until you have enough money to cover the expenses. This will help eliminate spending outside your budget; however, it can also extend your timeline.
2. Mortgage Refinance.
Secondly, if you’ve been making payments on your home for a few years and your interest rate is higher than current market rates, you may be eligible for a mortgage refinance. The refinancing will help reduce your payments and freeing up some money for you to finance your home renovation.
3. Cash-Out Refinance.
Also, you can tap into your home equity and borrow up to 80 percent of your home’s value to pay off your current mortgage plus take out more cash to cover the renovations. This option is encouraged only when you’re making improvements that will increase the value of your home, as it can add a lot of interest and fees.
4. Home Equity.
Another way is to get a home equity line of credit allows you to borrow money against the value of your home. You receive usually up to 80 percent of your home’s value, minus the amount of your loan.
5. Retirement Funds.
Last but not least, current homeowners can consider pulling money from a 401K or IRA account, even though they aren’t specifically meant to cover a home renovation. This option might incur additional penalties or tax payments, but may be worth it when making improvements that will benefit them financially in the long run.
As a happy student of life, Huy has discovered that life is a series of very interesting courses where he can’t just simply learn from books or schools. Fortunately, every person that he meets and every incident that he faces truly give him tremendous valuable lessons. The most important aspect of being a student of life is that he learns things with a great intention: to improve himself everyday.
With a strong background in finance and business, Huy will share with you great lessons that he has learned over the years. Let’s share our knowledge so we will learn from each other!