Renovation ready? Stuck at home and thinking about a renovation project? Outdated kitchen. Overrun backyard. Unusable basement space. If you have a home renovation project in your dreams, the first thing you have to consider is how you are going to pay for this fabulous project. So, let’s rundown the most common options to make your dream home renovations a reality.
Cash. Clearly, paying in cash is the most straightforward financing option. Save until you have enough money to cover the expenses. Boom. That’s it. This will help eliminate spending outside your budget. Of course, it can also extend your timeline.
Mortgage Refinance. If you’ve been making payments on your home for a few years and your interest rate is higher than current market rates… which is a very high probability in the current market…. you may be eligible for a mortgage refinance, reducing your payments and freeing up some money.
Cash-Out Refinance. 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 great but really only when you’re making improvements that will increase the value of your home. As It can add a lot of interest and fees.
Home Equity. Getting a home equity line of credit allows you to borrow money against the value of your home. You can usually pull up to 80 percent of your home’s value, minus the amount of your loan. Keep in mind this goes on a current appraisal of your home.
Retirement Funds. 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.
Keep in mind I am a real estate agent not a mortgage lender. So if you need a local lender to chat with give me a call and I am happy to connect you with some top notch folks who can really guide you through the process. From paying for it to getting the work done to selling this beautiful masterpiece, I can find the right people for the job.