If you are like most people, the pandemic has forced you to take a close look at your surroundings. Without the escape of movies and dinners out with friends, you have probably had more than enough time to take a good hard look at your home. Are you liking what you see?
For many, the answer has been no, which is why the home improvement industry has seen such a surprisingly huge boom during this time. Home improvement projects are expensive however and with most people trying to keep hold of cash for security reasons, financing has been the answer.
If this all sounds very familiar, perhaps you are looking for a way to finance a little home improvement project. Let’s look at some of the options that may be available to you.
Use Your Home Equity
If you have equity in your home, you can tap into it to pay for your home improvement project. There are two ways to do that.
First, you can do a cash back refinance. This is simply refinancing your mortgage and taking some of your equity out. This makes a lot of sense because you would be paying a very low interest rate. It would be nearly impossible to find a home improvement loan rate even close to the current mortgage rates of less than 3 percent. Because these rates are so low, you might even be able to get the money you need and end up with a mortgage payment that is even lower than you pay now.
The second way to use your equity is to get a Home Equity Line of Credit or HELOC. A HELOC is essentially a credit card that is backed by your home equity. Your bank will give you a line of credit and then you can use it repeatedly, just like with a credit card. The only difference is that the interest rate is far lower than what you would pay with plastic.
Get A Personal Loan
If you don’t have enough equity in your home, a personal loan is another option for you and there is no shortage of websites looking to help you. Online loan websites make the process of getting funding quick and easy, even if you don’t have perfect credit. Click here and you can see an example of one of these loan websites that allows you to do it all online. It doesn’t get much simpler.
The good with a personal loan is that the process is much easier than going through the cash back refinance process. No appraisals or piles of paperwork to deal with. If you want to get your project off the ground quickly, it is something to consider. Keep in mind however that, since it would be an unsecured loan, interest rates would be higher.
Use A Credit Card
You probably wouldn’t think about credit cards to finance a home improvement project, but it is something you might want to consider.
This is particularly true if you have good to excellent credit, because you may be able to qualify for a credit card with a low or even zero percent introductory rate. You can then use your credit card to finance your home improvement project with minimal or no interest. Just make sure that you pay the credit card off or transfer the balance before the introductory rate expires.
Obviously, using a credit card would only be a viable option for a relatively small and less expensive project. If that is what you are looking at, and you have excellent credit, it might be worth considering.
Find Contractor Financing
Finally is the option of financing through your contractor. Many home improvement companies have their own in-house financing or deals with lenders. This allows them to attract more customers because it streamlines the whole process.
In most cases, this is something that only the larger companies will offer, like that big chain home improvement store. This could be a negative for you if are looking for a more personalized and custom experience.
On the plus side however, you may be offered a low interest deal with a set term. This can potentially save you thousands of dollars in interest but use caution. Many of these deals simply defer the interest and if you do not pay the loan back on time, they add it back to the loan balance.