Desperate to Remodel Your Home? Here’s How to Find the Money
Sunday, January 3, 2021, 6:00 AM | Leave Comment
When your home is badly overdue for remodeling, there are several problems you’ll likely need to solve.
One of the biggest of these is financing the project, as complete remodels can be extremely expensive.
Here are four of the best ways to find the money you need to redo your home.
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Take Out a Home Equity Loan
One of the easiest ways to finance a major remodeling project is to borrow against the value of the home itself. By doing this, you can spread the payments out over a long period of time while likely locking in a lower interest rate than you’d pay on a personal loan. These loans are best for large projects, since you’ll likely need to access quite a bit of capital.
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Do a Cash-out Refinance
If you’re still paying for your home, you may want to consider performing a cash-out refinance to get the money you need for your home improvements. A cash-out refinance is essentially a second mortgage taken out to replace your existing one and leave you with some extra money beyond what you originally owed. This option can be especially attractive if you had an older fixed-rate mortgage, since you can likely get a higher interest rate today than you got 5 or 10 years ago.
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Look Into Peer-to-peer Lending
A novel type of financing, peer-to-peer lending is a system that lets you borrow money from private investors who will then receive interest as you repay. These loans can be used to finance small to medium-sized home projects at fairly reasonable rates. Peer-to-peer loans can be especially good if your credit is above average, since you’ll be able to pay less in interest. Typically, a peer-to-peer loan must be repaid within 3-5 years.
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Borrow From Your 401(k)
While borrowing from your retirement funds to pay for home remodeling isn’t always the best option, it can be good for smaller projects. Because you’re taking money out of your own retirement account, you won’t be charged interest or put on a specific repayment timeline. Before you draw money out, though, be sure to check into the tax implications, as you will likely owe some taxes on the amount you withdraw.
If you’re desperate to update your home, there are several different ways to find the money you need. The right option for you will depend on the project you’re planning and your own unique financial situation. Be sure to compare options to ensure you get the best possible financing arrangement.
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