How Should I Pay for a Home Renovation?
Q: I’m planning to renovate my house, and I’m wondering about my financing options. What’s the best way to pay for a home improvement project?
A: Home renovations can breathe new life into your living space, enhance your property’s value and customize your home to satisfy your unique needs. Whether you’re upgrading the kitchen, adding a new room or tackling long-overdue repairs, funding the project can be the most significant consideration. Fortunately, there are financially responsible ways to pay for a home renovation.
Here’s a complete guide to help you choose the best option.
1. Determine the scope and budget of your renovation
Before exploring financing options, take a moment to outline your renovation goals and calculate the total costs. Are you doing a minor upgrade or a major remodel? Gather estimates from contractors and research material prices to establish a realistic budget. Once you know your renovation’s scope and cost, you can determine how much financing you’ll need.
2. Use savings for smaller projects
For smaller renovations or updates, tapping into your savings can be the simplest option. Paying with cash allows you to avoid debt and interest charges. If you’re considering this route, evaluate your emergency fund to ensure you’ll have enough left for unexpected expenses after covering the renovation costs. The best part of using savings is that you’ll be done making payments on the project when the work is complete instead of paying it off for months or years to come.
3. Home equity loans (HELs): ideal for large-scale renovations
Home equity loans are one of the most popular ways to finance major renovations. These loans allow you to borrow against the equity you’ve built in your home, which is essentially the difference between your home’s market value and the remaining balance on your mortgage.
The benefits of choosing a home equity loan to fund your home renovation include locking in a fixed interest rate and having predictable monthly payments throughout the loan term, as well as lower interest rates than credit cards or personal loans. The funds are also disbursed in one lump sum, which makes them ideal for homeowners who are looking for capital to cover a single home improvement project.
If a home equity loan sounds like it might be for you, we can help! Call us at 281-571-5000 or visit us at any of our locations to learn about your options today.