According to Fox Business, Americans are likely to spend 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 possibilities.
Article Source: 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 is done also with how to finance home improvement. These are seven steps to solving this riddle.
1. Use cash
According to Fox Business, about 65 percent of homeowners who invest in home improvement pay cash for the job. It’s simple and you will find not interest fees with which to contend. Be careful because paying too much at one time could make it hard to pay other bills. Considering that as much as 85 percent of today’s homeowners finance home improvement with cash, even more people are budgeting carefully.
2. You can use credit cards
A senior researcher at the Center for Responsible learning, Josh Frank, reminds that revolving interest can keep you in debt for some time. Even the lowest credit card rates are twice the rate of a standard home loan. If you miss a couple of payments, it might even skyrocket to 30 percent or a lot more. If you must use a credit card, don’t use the card’s cash til payday loan feature, considering the interest rate for cash until payday via credit card is way higher than the standard credit card APR.
3. Use personal loan
Whether you go to a payday loan lenders or a credit union, unsecured personal loan might be accessible, depending upon your relationship with the institution and your credit score. In the case of a payday loan lenders, however, having good credit is not required for personal loans . Steven Rick of the Credit Union National Association explains that such personal cash loan (aka signature loans) can be either higher or lower in rate than credit cards. It might just pay to shop around.
4. Using any home equity loans
Standards for home equity loans have increased with the housing bubble burst. With an superb credit score, you may be able to get up to 90 percent of your current home’s value in a fixed-rate 10-to-15-year loan. For Business explains that rates will be higher by a point or two than the average home mortgage. Fixed-rate loans make long-term budgeting much easier when you’re trying desperately 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. 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 for any reason at all, instead of coming to you in a lump sum as with a standard home equity loan. Try to find a fixed 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 can get in, you can borrow up to $ 25,000 for up to 20 years at a very reasonable rate. The home itself secures loans more than $ 7,500.
7. Use contractor financing
Terms will vary wildly here, but if you are able to get some kind of fixed rate, no points loan with no other hidden fees, a contractor loan can cost anywhere from 5 to 11 percent. It will only depend on your credit score and trust of the contractor. Do some research.
Additional info at these websites
Fox Business
foxbusiness.com/personal-finance/2010/06/07/compare-home-improvement-financing-choices/
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