homeowners financing options remodeling

Are you thinking about improving and updating your home to enhance its aesthetic appeal as well as its market value, but are concerned about the high cost? Don’t be! There are many practical ways to finance your home remodeling

Let’s take a closer look at some different financing options.

This is the best way to cover home improvement costs. By paying for your project outright, you won’t have any lingering loans or interest charges to take care of. It’s an excellent option for small home improvement projects. You could also use cash in combination with another payment source listed below to reduce the interest you’ll be required to pay.

  • You won’t have to make any future payments
  • You won’t encumber your home equity


  • It can take a long time to save the cash you need to finance your project
  • You won’t receive any tax benefits

Low-Rate Credit Cards
If you have good credit, you can take advantage of credit card offers with 0 percent interest or a low interest rate. Charging your renovation purchases will allow you to pay them off over a specified period at a more attractive interest rate. The rate rises once the offer expires. These offers are suitable for projects that cost less than $15,000.

  • You can easily apply and qualify for them
  • You can finance your project without any interest


  • There are many terms to keep in mind, such as the expiration date and the interest rates once the offer expires
  • The payback time period is usually short
  • You won’t get tax benefits

Personal and Unsecured Loans
These loans are best for projects that range from $15,000 to $50,000. They don’t need collateral, so your home isn’t at risk.

  • You can easily qualify for them
  • Their loan amounts are usually higher than what credit cards offer
  • The payback time period is usually several years
  • There are usually no loan processing fees or closing costs


  • Interest rates tend to be higher than those of secured loans
  • The agreements are usually confusing, so you may not fully understand what you’ve signed up for
  • You don’t get tax benefits

Cash-out Refinance
Refinance involves replacing your existing mortgage with another one and plucking some cash out to cater for your home’s renovation. It can help you fund a big project while taking advantage of the current lower mortgage rates.

  • Monthly payments are lower than those with a home equity loan and line of credit.
  • You’ll get plenty of time to repay the loan due to the long payout plan – usually 30 years


  • It can be expensive in the long run. The additional interest rates and closing costs may be high.
  • You’ll restart your loan payments with a new 30-year mortgage.

Home Equity Loan
This is a second mortgage against your home. You get a fixed amount of money and pay back the principle and a fixed interest rate over a period of time, usually 15 years. Some lenders can shorten the time to as little as five years or extend it up to 30 years. It’s a great option if you don’t like adjustable rates or if you require a certain amount of money and have a budget that can accommodate the payments.

  • Interest rates are usually low
  • Monthly payments can be low
  • Interest can be tax deductible


  • It can be expensive, with closing costs and transaction fees similar to your primary mortgage
  • A penalty may be applicable if you repay the loan early

HELOC (Home Equity Line of Credit)
Unlike home equity loans, these loans don’t pay a lump sum of all the money you’ve qualified for. Instead, they allow you to draw out funds as needed and pay them back at your own pace provided you make the minimum monthly payments. This is a compelling choice if you need money periodically or want to carry out a long-term project and are unsure of when you’ll need the money or exactly how much you’ll need.

  • They don’t have closing costs
  • Interest is tax deductible
  • Fees aren’t as steep as those you would get with home equity loans


  • Interest rates are variable, so they could increase dramatically, making it harder to plan for repayment

Reverse Mortgage
If you’re at least 62, this loan lets you into tap your home equity for several purposes, including remodeling your house.

  • You can easily qualify for it
  • There aren’t any monthly payments


  • It’s a complex product that can be confusing
  • It’s more expensive than home equity loans or refinancing

For more home remodeling or home maintenance services contact B.A. Morrison

Make sure you assess your situation carefully in choosing the most suitable financing option. For more information on home remodeling, contact us at B.A. Morrison. We take pride in helping homeowners in Castro Valley and the surrounding San Francisco, East Bay Area enjoy their homes. We offer a wide variety of construction, remodeling, and home maintenance services including roofing repair, kitchen and bath remodels, plumbing repair, room additions, and design assistance. Call us today at 510-538-9817 or use our online contact form.

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