Financial Tools You Can Use to Fund Your Next Home Renovation
When you look around at your house, are you proud of what’s around you? If you have a house that isn’t aging well, it might be time to look into upgrading.
Those avocado-green walls and appliances that were super cool in the 1970s probably aren’t looking too hot right now in the 21st century. However, with a little TLC and money, you can create an updated, modern dream home.
To get ready for your renovation, you’ll need to make sure that your finances are in order. Even if you don’t plan on doing a large reno project, you might end up having to face some unexpected expenses.
It’s a good idea to have a little bit of flexibility in your budget to prepare for these surprises. Broken pipes, termite damage, mold – these are just a few of the possible hiccups you might encounter as you embark on your project.
Below, we’ve outlined various strategies you can use to fund a home renovation. Keep reading to find out more!
Are you over the age of 62, have substantial equity in your home, and live in your home full-time? If so, obtaining a reverse mortgage might be the answer to your financial quandaries.
A reverse mortgage allows you to convert the equity you already have in your home into cash to use as you please. You can choose to get a lump sum payment or monthly payments, it’s all up to you.
If you look around and decide that redoing your home is simply too much work and effort – we don’t blame you. The good news? You can also use a reverse mortgage loan to get an entirely new residence as well. The typical reverse mortgage purchase process is as follows:
- The reverse mortgage borrower puts down an initial down payment with the proceeds from either a savings account or previous home.
- The equity earned with that initial down payment and the new house’s appraised value is utilized by a lending institution to determine how much the borrower will get for his or her reverse mortgage loan.
- After the reverse mortgage for purchase loan is officially approved, all or a portion of the proceeds will go toward the leftover cost of the home – just like a traditional mortgage.
A reverse mortgage may not be an option for everyone, but it can be a good choice for those that qualify.
You also have the option to use a credit card to pay for your home renovation. Of course, this option only works if you have excellent credit. Using a credit card for smaller home renovation projects is an easier process than applying for a loan.
With a credit card, you could paint your home or buy new tile flooring for your bathroom – even if you’re credit limit is fairly low. These type of upgrades would cost a smaller amount of money up front and you can pay it off slowly.
Ideally, you can apply for a 0% introductory APR credit card and pay off your credit card balance within that period before the interest rate kicks in.
Save, Save, Save
The last option is a good way to approach your home renovation if you’re doing projects within a doable range of your savings account. Worried you won’t have enough? Then it’s time to start tracking your spending if you’re not doing so already.
Keep a budget and use a helpful budgeting app so you know exactly what amount of money is going out and what’s coming in. Once you have an idea of your income and expenses, you can start to strategize where you should (and should not) spend money. More importantly, you’ll be able to figure out where you can stop spending.
Cutting down on daily lattes at the local coffee shop, eating more at home instead of out at restaurants, and ending subscriptions you don’t need are just a few ways to save. If you’re looking for a bigger impact on your cash flow, picking up a second job or side hustle might be a good way to earn more as well.
Whether you’re looking to redo your entire house or just change the paint color in your living room, a little upgrading can make a huge difference. Updates to your property not only increase the value of your house, but they’ll also help increase your quality of life and make your house feel more like a home. If you can stay positive, plan, and prepare for the unexpected, you’ll be on your way to an amazing home!