5 Ways To Help You Finance A Home Reno
Read more to dive a little deeper into the most common financing options.
1. Renovation Loan
Certain loans, like FHA 203(k) or Fannie Mae’s HomeStyle Renovation loan, combine the cost of the home and renovation into one mortgage—perfect for bigger projects or a complete fixer-upper.
2. Home Equity Loan or Line of Credit (HELOC)
Tap into your home’s equity for a loan or line of credit. These options allow you to borrow based on the value of your home.
These usually come with lower interest rates compared to credit cards and personal loans.
3. Cash-out Refinance
This type of refinancing replaces your existing mortgage with a new home loan for more than your current loan amount — the difference being the extra cash. You must have enough home equity to use a cash-out refinance.
This can be a smart option if interest rates are lower than your current mortgage rate.
4. Personal Loan
For smaller projects, a personal loan might be the simplest option. Keep in mind these often have higher interest rates than home equity loans.
5. Credit Cards
Another option for smaller home improvement projects is to use a credit card. This may be a good idea if you can get a 0% introductory rate and plan to pay off the amount before the higher interest kicks in. Don’t forget to look for sign-up bonuses and cashback incentives.
Remember to always get quotes from multiple contractors to avoid surprises, and be realistic about your budget. Don't forget to factor in contingencies—unexpected costs always pop up!
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