Home renovations can quickly add up. If you’ve ever tried to perform a kitchen or bathroom renovation the projects can quickly burst from a few thousand dollars to tens of thousands of dollars. So you really need to establish a budget ahead of time and then stick to it.
Even with a budget you may need some financial help paying for the project. Thankfully, you do have some monetary options available to you for this.
Here are a handful of the best loans for home renovation projects you need to consider, regardless of what you’re tackling and what you’re upgrading.
Personal Loans for Remodeling
A personal loan is helpful if you only need a few thousand dollars. These are short-term loans that will usually give you anywhere from a couple thousand dollars to maybe even $40,000 (or more).
Personal loan rates depend on your current income, credit score, and what you can afford. When you don’t want to put out of pocket money down (from your savings account), a personal loan is a great way to pay for a renovation. Just make sure to shop around for the personal loan. Credit unions typically have the best rates, but compare online to see what you can qualify for.
Generally, a credit card is not ideal when you’re looking to pay for the home renovation all at once (unless you can pay off the entire balance when it’s due). Usually a credit card will have higher interest rates (average APR is 19.24%) than your other loans but there are a few times where you might want to consider this option.
If you’re paying as you go, renovations take longer, but it lets you spread out the costs and pay it off easier. If you are able to pay off your credit card every month this is the best way to go (because then you won’t have any interest attached when you pay off the amount in full).
FHA Title-1 Loan
This is one option that allows a borrower to take out money for the payment of the renovations. If you are paying for a renovation under $7,500 you won’t need to put any equity down, which is ideal. You can take up to $25,000 out on a single family home and $60,000 on a multi-family home. The Title-1 Loan is desirable as you have up to 20 years to pay it back (of course, you can pay back the entire loan sooner if you don’t want to drag it out).
Home Equity Loan
If you have built up equity in your home this is a great option for you to consider. You likely won’t be able to take out a home equity loan for several years (as it takes some time to pay off some of your mortgage), but it is something to consider. You only want to do this when you’re in a stable financial situation though. You don’t want to default on your equity loan, as then you could have some problems with the banks and your home.
There’s Plenty Of Home Improvement Loans Out There
These are just a handful of the best loans for home renovation projects. You will need to go through the different options in order to identify the best monetary opportunity for you. Just make sure you have a budget you can afford and opt into a loan that gives you the best interest and payment plans. And never try to over extend yourself. While you might want to go out for a particular upgrade, it’s best to go for what you can afford so you don’t end up further in debt.