With extended time at home due to the pandemic – or people getting ready to sell their home preparing for a move – home improvements have quickly become a hot topic of conversation. While YouTube has become the go-to guide for smaller tasks, major home improvement projects often require the help of professionals and also additional financing to make them happen.
When Spring Cleaning isn’t enough to get the house looking the way you want, a more expensive project may be needed. However, unlike spring cleaning or updating the curtains, home improvements are going to make a bigger dent in your wallet.
The right way for you to finance your home improvements will depend on the rest of your financial picture. Do you have plenty of money in savings? Do you plan to sell the home in the next couple years? Are you on track to meet your other financial goals and obligations? Answering these questions in conjunction with sorting out your options is important while you work toward building wealth.
Here are a few great options for financing those home improvements:
HELOC (Home Equity Line of Credit) – A HELOC is a tool to have in your financial toolbox. Not only does it provide you an extra cushion of access to funds, but it can be a way to finance home improvement projects where the costs seem to trickle in. They can also be flexible in their repayment, helping you work paying back expenses into your plan.
Home Equity Loans – A home equity loan is a fixed rate loan and will get you a lump sum to use at your discretion. It is much like a mortgage refinance, with a cash out option, except with less closing costs.
Credit Cards (Read Carefully) – If you are planning to cover the large expenses of home improvement with cash, consider using a card with great cash back or airline miles to get the most bang for your buck, and pay it off before interest accrues.
Renovation Specific Loans – Don’t have the home equity yet needed to cover those improvements? Check out Limited and Traditional FHA 203(k) mortgage loans (typically helps with covering projects under $35,000 for those with limited equity/low credit) OR check with your local bank or credit union for options.
The decision for financing home loan improvements isn’t always an easy one, here are a few tips to get you going:
Plan early and plan often – With holistic financial planning, making educated decisions on when and how to handle your home improvements can help in your bigger picture.
Build a relationship with your bank – having a good relationship with a bank or credit union and a lender at the institution can provide you with not only trusted advice, but possibly reduced fees and additional opportunities.
Explore local tax and home improvement benefit options – As communities work hard to uplift their neighborhoods, many offer varying incentives for home improvements. Check out your state and local governments websites to search for opportunities.
Need help working your plan for home improvements? Schedule a complimentary consultation with Julia to create a comprehensive, individualized strategy to help you work toward building wealth and Live Well!
Investment advisory services offered through LW Advisors LLC, a Registered Investment Advisors in the state of Iowa.
