According to Fox Business, 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 By Personal Money Store
How to finance home improvement – Seven possibilities
Breaking a larger concept down into smaller parts makes it much less daunting; that involves when you’re trying to finance home improvement. Here are your seven steps to solving the home improvement finance riddle.
1. Use only cash
It was reported by Fox Business that historically, about 65 percent of homeowners who invest in home improvement pay cash for the job. It is simple with no interest fees. Of course, paying cash might make it difficult to pay other things so be careful. Considering that as much as 85 percent of today’s homeowners finance home improvement with cash, even more individuals are budgeting carefully.
2. Use some credit cards
Josh Frank, a senior researcher at the Center for Responsible Lending, reminds that revolving interest can keep you in debt for a while. Even the credit card with the lowest rate is at least twice a home loan rate. If you miss a couple of payments, it might even skyrocket to 30 percent or more. If you really need to use a credit card, don’t use the card’s cash today feature, as the rate of interest for cash till payday via credit card is much higher than the standard credit card APR.
3. Use some personal loan
Whether you go to a private money lenders, a bank or a credit union, installment loans may be accessible, depending on your relationship with the institution and what your credit score is. Within the case of personal loan company, having good credit is not required for personal loans . According to Steven Rick of the Credit Union National Association, such personnel loans (aka signature loans) could be either higher or lower in rate than credit cards. It might just pay to shop around.
4. Work with home equity loans
Standards for home equity loans have increased with the housing bubble burst. If you’ve a superb credit score, you can get 90 percent on your current home's value in a fixed rate. Fox business says rates should be slightly higher than a mortgage. Fixed-rate loans make long-term budgeting much easier when you’re trying to choose how to finance home improvement projects. Be wary of variable rate loans, as they typically will not go lower and generally will only increase.
5. Trying to 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, instead of coming to you in a huge lump sum as what happens with a standard home equity loan. Look for a fixed rate, rather than a HELOC with a variable rate.
6. Use an FHA remodeling loan
The Federal Housing Administration (FHA) has a small remodeling loan program – 3,854 loans in 2009, according to Fox Business – but if you are able to 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. Getting some contractor financing
Terms will vary wildly here, but if you are able to get a fixed rate, no points loan with no other hidden fees, a contractor loan can cost anywhere from 5 to 11 percent. It depends upon your credit score also as how much you trust the contractor. Do your research.
A lot more information on this topic
Fox Business
foxbusiness.com/personal-finance/2010/06/07/compare-home-improvement-financing-choices/
No comments:
Post a Comment