You’re not broke, you just have a problem with a positive cash flow. When you have your money tied up in various things like your business or in investments, you sometimes have trouble finding the means to pay for things like home renovations.
This doesn’t mean you have to cash in some of your stocks or sell off some of your stuff to pay for some upgrades to your home. With a little financial creativity, you can find some ways to pay for these renovations.
Don’t think you just have to get used to your small bathroom. In this article, we will find some ways you can get the cash you need.
If you’ve had your house for a while, or the area where you live has been getting gentrified, then you likely have seen some gains in the value of your home.
You can access that equity in the form of a home equity line of credit (HELOC). It’s a secured loan that offers much lower interest than you would get with a personal loan.
These loans are not risk free, however. Your home is the collateral so if you are unable to make repayments, you risk foreclosure. You can learn more by reading up on the money monarch before making a decision.
Home equity loan
Rather than a HELOC, you can take out an equity loan. Also called a second mortgage, it is similar in some ways to a HELOC. The major difference is that with a HELOC you get a line of credit that lasts for up to ten years and you draw on as you need to.
A home equity loan is a lump sum that is given to you for whatever reason you need. If you know exactly how much your renovation project is going to cost, then you can take out as much as you need to not overextend yourself.
You don’t have to worry about changing interest rates as you are locked in on a fixed interest rate.
Refinance your mortgage
If you really don’t like the idea of any kind of loan, then see if you can save some money by refinancing. If you can lock in at a lower interest rate then you can save hundreds of dollars per month.
If you are the patient type then you can just put that extra money in a dedicated bank account and do the work when you reach the amount you need.
Otherwise, take a loan and then use the extra cash to make the payments on the loan.
Get a government loan
Though somewhat restrictive, you may qualify for a government loan at a very low interest rate. One such type of loan is the HUD Title 1 Property Improvement Loan.
This could be a really good option if you haven’t built up any equity in your home yet but need to make the house more livable. You have to use the loan for repairs and certain renovations won’t qualify, however.