Is your home in serious need of renovation? Whether it needs
a remodel because it’s looking old and out of date, or for more serious
reasons, such as a failing roof, where do you get the money to pay for things
like that? Unless you just have thousands of dollars at your disposal, the
answer is likely through financing. However, there’s a smart way and a
not-so-smart way to secure financing.
Obviously, as a responsible homeowner,
you want to choose the smart way.
Good Credit Options
The best case scenario is that you have excellent credit and
can work with an upscale, reputable lender, such as a bank, a broker, or a
credit union. If you are able to secure a loan from one of these choosy
institutions, you can use your home as collateral and borrow the amount you
need.
Just don’t go too crazy with borrowing, or you could blemish
the spotless credit you’ve worked so hard for. Only borrow what you actually
need and don’t get sucked into doing extra repairs or remodeling just because
you have the credit available.
Tap Into Your Savings
If you have a lot of equity built up in your home, then you
can borrow against that to handle remodels and repairs. If you don’t, however,
then you may have to look to other options.
One of the best options is to tap into your savings account.
That might be tough, but paying with cash is always better and cheaper than
paying with credit in the long run. You should only do this, however, if you
have enough to still maintain some degree of savings. Most financial advisors
suggest always keeping at least three months worth of living expenses in your
savings account. If you can do that and still manage your remodel or
renovation, then go for it.
Tapping into your savings is serious business, though, so
save this option for repairs and renovations that are absolutely necessary, not
just ones that are going to make your home look prettier.
Break Out the Plastic
When you’ve exhausted all other options, it may just be time
to use your credit card to finance those remodels or repairs. As a caveat
though, don’t use your plastic if you’re not able to avoid paying interest on
this hefty purchase. If you can pay off more than your minimum amount each
month, even after the repairs are done, then go for it. If you can’t, though,
you may want to keep searching for the right fit for you.
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