When I embarked on a major house remodeling endeavor, I realized I couldn’t afford the cost. This got me all depressed, as I felt I had no option to improve the state of my house and boost its resale value. Thankfully, my home designing company Newstart Home, came to my rescue and I am very grateful for it even today.
The company showed me there were different options for paying for home remodeling. Some of the suggestions given were unique, while others were sheer common sense.
Refinance Existing Mortgage
Like most homeowners, I had taken a home loan to buy my house. Over the years of repaying the mortgage, I built substantial home equity. So, the best way to pay for home remodeling was to refinance my original home loan. As there was equity, I could get a bigger loan and the difference between the two loans would be more than sufficient to fund my home remodeling project. This was the option I took ultimately because my home remodeling project was large and the interest rates were attractive enough to benefit from them.
Turn your House into a Vacation Home
I was informed I could convert my house into a vacation home, considering it was located close to the Gold Coast. This would help me get holidaymakers and get rental from them for the duration of their stay. Of course, I would have to shell out money to advertise my property and make it attractive for prospective short-term tenants. But the idea of getting quick money through short-term tenants was attractive, but I ultimately decided against it, as I don’t really think that I am landlord material!
Unsecured Personal Loan
There is also an option of taking out an unsecured personal loan. At least, this way if you default on the payment, you don’t risk your home, as you will not be putting it up as collateral. Rather than going to a bank, I would advise people to ask their close family members for such a loan, as the interest rates would not be exorbitant. It is best to work out a deal with family members and pay them interest at existing rates to avoid misunderstandings. Make sure you draw up an agreement stating the terms and conditions of the repayment.
Use Your Credit Card
If you have a credit card with high credit amount, you can think of using it to pay for your home remodeling project. The drawback is the high interest rate that most credit card companies charge, but you will not have to incur loan fees or closing costs. Use this option only if you are certain you can pay off the entire amount in a few months’ time. Otherwise, you will be paying a lot on interest and if you miss a payment, you risk lowering your creditworthiness.
Get a New Loan on Your Home Equity
If you have built equity on your home, but you don’t want to refinance your existing mortgage, the other option is using the equity to get a new loan. This can prove to be beneficial if you are undertaking once-in-a-lifetime home remodeling project. Remember, you will have to pay the loan fees as well as the closing costs. So, take these costs into consideration. The other risk is losing your home if you default on the payment.
Get a Paying Guest
As strange as it may sound, it may be worthwhile to explore this possibility. Take in a lodger, who pays you monthly for renting a room from you. This could be a good option for unmarried and single people. I didn’t like it because I was married and had kids. I didn’t want a stranger in my house. But for some people, it could be a source of additional income that can be banked every month until they have sufficient money to pay for the home remodeling project.
Make Your Home More Energy Efficient
Most people don’t think about the extra amount they are paying for heating and cooling their homes. But if you make your home more energy efficient, you will reduce your heating and cooling bills, which can save you money. The money saved over a period of time can be more than enough to pay the remodeling costs. So, insulate your home and block those crevices and gaps to prevent heated or cooled air from escaping outside.
Which option do you feel works best? Please share your thoughts and suggestions in the below comments section.