If you’re buying a new house that needs some TLC or working on remodeling your existing property, costs can add up fast. From construction and waste removal to decorating and new furniture, home renovation projects are expensive, which is why so many people often leave them a dream instead of a reality. But you can finance your home renovation with some of these suggestions. It’s not always easy putting together enough cash to finance the work, but you’ll be happy to settle down in your beautiful new home when it’s all polished up.
Use The Credit Cards Collecting Dust in Your Wallet
Credit cards are perfect for long-term projects, especially ones that require a bit more than you happen to have on-hand. By using your credit card and making payments each month, you can actually improve your credit score simply by paying for what you need. Opt for a card with low interest, though. This will help you avoid getting slammed with excessive charges that make it difficult for you to repay what you owe. The goal of a credit card is never to wine up in debt indefinitely.
Take Out a Second Mortgage
Taking out a second mortgage can give you access to a large sum of money when you need it most. The lien is placed against the portion of your mortgage that you’ve already paid, and it’s based on your home equity. Home equity is the amount of your house that you actually own. In other words, it’s what you’ve officially paid off from your mortgage lender. Until it’s paid off entirely, only a percentage of your home actually belongs to you. Your home equity includes your down payment and the market value of your home. When you consider taking out a second mortgage, the lenders will calculate an amount and give you a potential principal based on your current mortgage and equity.
Sell Your Life Insurance Policy
If your life insurance has a cash value, you can sell it and start using those finances now. Third-party investors often buy life insurance policies for any amount less than the death benefit but greater than the cash value. This means you can access serious cash if you’ve been paying on your policy for several decades. Typically, however, you have to be 65 or older to sell your policy. Check out this full guide on how to sell your insurance policy as it’s filled with everything you need to know about the process. If you’re younger, you can consider surrendering the policy for its cash value or borrowing cash from it to finance your renovation.
Look Into Renovation Loans
Did you know there are loans specifically designed to help you make home improvements? In this case, you borrow against your home’s future value instead of its current value or your equity. An appraiser will determine how much your house is likely to be worth after its renovations are complete, which makes you eligible for more money upfront. This is especially valuable for people who are in the process of redoing a fixer-upper property or whose houses are outdated and/or have fallen into a state of disrepair. Renovation loans tend to come with high interest rates, and their closing costs are higher as well. So, you should only consider these if they make sense for your future plans.