Can’t pay some of your home repairs? Here are some alternative ways to pay those bills!
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If you have been thinking of carrying out some repairs on your home and you have not been able to bring yourself to actually do the work or do the major calculations, you might have to be ready for some shocker. Averagely, according to Homeadvisor.com, renovating a kitchen could cost up to $30,000 and remodeling a bathroom can cost up to $9,000 or more.
There is no doubt about the fact that carrying out a budget friendly renovation and maintaining your home is to your benefit and yours alone in that it increases the value of your property and makes it look better. Getting the money may be hard, but there are ways to get it and that is just what we will be discussing in this article.
Refinancing your mortgage is a good way to lower your current interest rates if you paid for your home years ago (at an interest rate higher than the current rates). This way, you could reduce your monthly dues and ultimately have enough cash to renovate your home. Another way to raise money for your home renovation is to cash out on your refinance from your home equity. Licensed lenders will lend you up to 80 percent of the value of your home to pay off your home mortgage. Usually, a cash-out refinance is advisable if the renovation you are carrying out on your home will increase its value.
There is a catch to this type, however; your home will serve as collateral for a costlier loan, so you need to think carefully and explore other possible options. The basic fact here is that you will be paying for brief expenses with a long-term liability thereby making you pay more interest and increase the overall cost of renovating your property.
Home Equity Line of Credit (HELOC)
HELOC, also known as a home equity line of credit, is one other important means to borrow using your home’s value as collateral. It is however different from a mortgage refinance because it does not pay off your mortgage. Instead of that, you get a line of credit which can be up to 8- percent of the value of your home minus the amount of loan you have in your home.
Home Equity line of credit has a draw and repayment period. The draw period is the time you can spend the money you have on your credit line and it can last for up to ten years. The payments you will be making monthly will cover the interest and the principal on your outstanding balances. During the repayment balance, your monthly payments will be higher because more principal will be included, and it lasts for up to 15 years.
Obtain another home loan
A second loan is often called a home equity loan and this is another way to use money from your equity without refinancing your mortgage. This is different from a home equity line of credit in that you would be given a huge sum of money rather than a line of credit that you will be given with a HELOC. With a second home loan, you will not have to refinance your mortgage (especially if the interest rate is low).
Refinancing your mortgage or getting a home equity line of credit offers some tax advantages which you will not get in a personal loan, but then with a personal loan with low interest rate, you may not have to put up your home or any other assets as collateral. Cash Mart suggests that in applying for a personal loan, you must have an excellent or good credit score. You may also have to pay a much higher interest rate on personal loans and a short period of time to fully pay off the loan. This means your monthly payments will be higher than other options but at the end of the day, the interest rate you would pay will be lesser.
A credit card allows you to make purchases even if you do not have the cash at the moment. Some credit cards offer rewards for every purchase you make, but you need to make sure you spend within your means and you will be able to pay back the money spent later. Credit cards also come with higher interest rates than other options.
Take out cash from your savings
This takes quite a while and you may have to be patient with it. You may also need to have started saving for a long time before the scheduled time for your home renovations or new home decorating. Once you have substantial savings, you only have to take out money and pay in cash for all the repairs you would like to carry out in your home.