Americans have big remodeling plans this year, with painting, new flooring, and bathroom updates at the top of their list.
But paying for those changes? That’s another story. According to a recent survey, most people don’t even have enough savings to cover a $1,000 emergency.
Fortunately, savings aren’t the only option you have if you want to make some choice upgrades around the house. Here are some other options you can consider.
The Most Affordable Ways to Finance Your Home Improvements
Obviously, the best way to pay for your home upgrades is to use cash or savings — something with no interest, no application fee, and no extra costs.
But sometimes, those funds just aren’t available. When that’s the case, these are your next most affordable options:
A home equity loan or HELOC
Home equity loans and HELOCs (home equity lines of credit) allow you to turn your home equity into cash. Use it to pay your kid’s college tuition, settle up medical bills or, of course, improve your property. They come with lower interest rates than credit cards and personal loans, and with HELOCs specifically, you can take out as little or as much as you like.
A nice little bonus? When you use these loans to increase your home’s value, you get to deduct any interest you pay from your annual tax returns.
A cash-out refinance
Refinancing your home can also let you tap your home equity. Here’s how it works: You apply for a new loan in a higher amount than your current balance. Once you close, you get the difference between the two loans in cash. Use it toward home improvements or whatever you’d like. You’ll pay it off month over month just as you did your first loan.
With mortgage rates as low as they are right now, refinancing may even lower your interest rate and monthly payment as well.
A cash-back credit card
Credit cards come with some pretty high interest rates, but if you have to use one, aim for a cash-back or rewards-earning one. These will give you discounts at certain stores (hopefully places like Home Depot or Lowes!), as well as cash back on every purchase you make.
If you’re not eligible for one of these cards, consider taking out a new card that has a promotional low (or even zero) APR period. Just aim to pay the money back before that promo runs out.
Other Ways to Pay for Home Upgrades
There are other ways to pay for your home improvements, but they might not be the most cost-effective. If you have to, though, you could also use a personal loan to finance your projects. Keep in mind these come with pretty high fees. They can offer quick funding and easy application processes, though. Just steer clear of payday loans; these can lead to a vicious cycle of debt.
You could also look to 401(k) loans. If you have a 401(k) account, you might be able to take out a loan against it. This does come with some risks (it puts your retirement on the line), and it’s not available from that many lenders.
Need Help Paying for Home Improvements?
Have big plans for remodeling your home this year? Get in touch with Premier Nationwide Lending today. We’ll walk you through your options.
Premier Nationwide Lending is an Equal Housing Opportunity lender. Sponsored by NTFN, Inc. 6201 West Plano Parkway, Suite 100, Plano, TX 75093 | NTFN NMLS 75333.