Fox Business reports that Americans are likely to spend a lot more than $ 121 billion on home improvement in 2010, so knowing how to finance home improvement is very important. Here are seven of the financing options.
Source for this article: How to finance your home improvement projects
How to finance home improvement – Seven options
Breaking a larger concept down into smaller parts makes it much less daunting; that is done also with how to finance home improvement. These are seven steps to solving this riddle.
1. Make an effort to use cash
Fox Business reports that historically, about 65 percent of homeowners who invest in home improvement pay cash for the job. There are no interest fees and it is simple. Be careful because paying too much at one time could make it hard to pay other bills. Considering that up to 85 percent of today’s homeowners finance home improvement with cash, even a lot more individuals are budgeting carefully.
2. You can use credit cards
Revolving interest can keep you debt for a while as outlined by a senior researcher at the Center for Responsible Lending, Josh Frank. Even the lowest credit card rates are twice the rate of a standard home loan. It could skyrocket to 30 percent or more if you miss a payment or two. If you really need to use a credit card, do not use the card’s cash today feature, as the rate of interest for cash until payday loan via credit card is much higher than the standard credit card APR.
3. Use personal cash loan
Whether you go to a payday loan lenders or a credit union, unsecured personal loans may be accessible, depending upon your relationship with the institution and your credit score. However, In the case of a payday loan store, having good credit is not required for personal loans. As outlined by Steven Rick of the Credit Union National Association, such personel loans (also known as signature loans) could be either higher or lower in rate than credit cards. It might just pay to shop around.
4. Obtaining home equity loans
Standards for home equity loans have increased with the housing bubble burst. You may get up to 90 percent of your current home's value in a fixed rate 10-15 year loan with an great credit score. Fox business says rates should be slightly higher than a mortgage. Fixed-rate loans make long-term budgeting much easier when you’re trying desperately to choose how to finance home improvement projects. Be wary of variable rate loans, as they will not go lower and will only increase, especially if you’ve difficulty making payments on time.
5. Use a HELOC
A home equity line of credit (HELOC) sets up an account where the money is there for home improvement if you need it for any reason at all, instead of coming to you in a lump sum just like a standard home equity loan. Search for a fixed rate.
6. Get an FHA remodeling loan
The Federal Housing Administration (FHA) has a small remodeling loan program – 3,854 loans in 2009, as outlined by Fox Business – but if you can get in, you are able to borrow up to $ 25,000 for up to 20 years at a very reasonable rate. Loans more than $ 7,500 are secured by the home itself.
7. Get contractor financing
Terms will vary wildly here, but if you can get a fixed rate, no points loan with no other hidden fees, a contractor loan can cost anywhere from 5 to 11 percent. It will only depend on your credit score and trust of the contractor. Do a little bit of research.
Find a lot more info on this topic
Fox Business
foxbusiness.com/personal-finance/2010/06/07/compare-home-improvement-financing-choices/
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