To many people, completing a home improvement means also means taking out a home equity loan.
While that may be a good option for some homeowners, others may not want to get one of these loans, either because they do not have a lot of equity in their home or because they do not want the hassle of applying for a new loan.
But that doesn’t mean a home improvement project has to be put on hold, there are several other ways of funding a renovation project.
- Cash. As with any other major purchase, paying with cash could save you a lot of money in interest and finance charges. While the option is not always viable, carefully weigh the pros and cons of financing your project versus waiting until you have saved enough money to pay with cash.
- Credit cards. If you don’t have a major project, you may be able to charge the expenses to a major credit card or an in-store charge card. Be cautious with this option however, because unless you can pay off the balance quickly, you may be charged a lot of interests. If possible, you may want to sign up for a low interest credit card and plan to pay the balance off before the interest rate spikes.
- Title I Property Improvement Loan Programs. These loans, available from most commercial lenders is insured through the Federal Housing Association (FHA) may be a favorable option for residents who do not have a lot of equity in their home. There are be some restrictions on the type of worker covered by the loan, and there strict loan limits. Check with your local bank for more information.
- IRA loans or borrowing from life insurance. While these options sound like they are equivalent to “borrowing money from yourself” there are some very serious tax penalties to think of. Basically, these options should only be considered if all other potions have been exhausted and the work needed on your house is severe and cannot be differed until a later date.
While a home equity loan might be an option for may people looking to fund a home improvement project, it is not the only option.
By David Plowman