In a house remodeling, wall color and placement, room size and other renovations may be changed. But in every renovation project, one thing is always present: financing. Nothing can be started without funds; nothing will be done without an adequate budget. Where can you get the money to support your project?
Here are some sources of home renovation financing:
- Ready money and assets convertible to cash
These are money sources readily available to the homeowner like cash, liquid assets, savings, checks, savings bonds nearing maturity.
- Interest, fee, and charge free
- Not dependent to anyone.
- Exhaust reserves.
- Not everyone has enough cash on hand.
Conclusion: Ready money and assets convertible to cash are for those who have sufficient funds.
A credit card is issued by a bank or business that allows somebody to purchase goods and services and pay for them later, often with interest. Some are paid monthly; others offer zero-interest that are payable in 6 months or a year.
- Money is accessible anytime.
- With large home renovation-related purchases, the card holder can accumulate reward points.
- Risk of high interests and fees
- Gives a false sense of security: a feeling of having more money that you actually have.
Conclusion: A complicated home renovation financing that requires maintenance and proper attention.
The classic home renovation funding: home equity loan.
- Perfect in financing large projects like room additions.
- More affordable interest rates than personal loans and swipe cards.
- Too much use of a home’s equity depletes the amount to be received by the time the house is actually sold.
- The large amount available encourages spending more than what is just necessary.
Conclusion: Home equity loans are perfect for big projects only.
Sweat equity requires the help of family and friends. They will help in the home renovation just for a good time or a good day’s meal.
- Free labor
- There is 100% control over the project.
- Materials still needs payment
- Hiring home renovation professionals work more efficiently.
Conclusion: Sweat equity is good is as good as bonding but requires some skill in home renovation.
There are a lot of ways on how to finance a home remodeling project. It is up to you on which is more profitable, safe and accessible.