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Home > Featured > What You Need to Know About Your Home Improvement Financing Options
What You Need to Know About Your Home Improvement Financing Options
The longer you live in your home, the more likely you are to need a costly repair that you simply can’t pay out of pocket. Whether it’s a septic problem, the siding needs replaced, or your basement flooded, at some point you’ll have to figure out how to repair a problem that you simply can’t pay with the money from your savings account.
That’s where home improvement financing comes in. It can enable you to afford a costly repair that would otherwise be out of your reach by breaking down the total into easy-to-pay monthly installments. You just have to make sure you understand your options so you choose a loan that fits within your budget.
Most people don’t automatically look into a personal loan when a home repair is needed because it can seem like a hassle, but it’s one of the best ways to fund a project. For example, roof repair loans can provide you with just enough money to make the repair, which can help keep costs down. Being able to easily compare rates online is also a perk of choosing a personal loan.
Personal loans are an especially good option if the repair is fairly straight forward, or if the cost of the repair is relatively low. It is also a great choice if you have good credit, as you’re likely to get a good interest rate that you may not get with the other options on this list.
Home Equity Loans
Home equity loans are a popular option with homeowners who have been living in their home for years. However, you also have the option of a home equity line of credit. Understanding the differences between the two is important.
Home equity loans: Borrow a fixed amount with a fixed interest rate. You’ll pay back the loan with a fixed monthly amount that includes principal and interest payments until the loan is paid in full.
Home equity line of credit: Draw money as you need it and pay a variable rate over the lifetime of the loan. In many cases during the repayment period, you’ll be paying the interest only until the final balloon payment is due. If you can’t make the large, final payment, you will have to refinance with another lender at a potentially higher interest rate.
It may sound like a bad idea at first, but paying your home repair with a credit card can be an option. You may end up paying more interest than the first two financing options on this list, but a credit card can provide you with some perks, like airline miles and cash back. It also provides you with a way to pay for a repair immediately, while more traditional methods can take weeks or even months.
That home repair needs to be completed, but it shouldn’t be at the expense of your financial well-being. Weigh your options carefully. By finding the right one, you can fit even the costliest repair into your monthly budget without breaking the bank.