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Add Some Cash to Your Home Improvement Financing

By: Allison Millar, Contributing Writer
In: Uncategorized
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You’ve decided to take the plunge and tackle a few home improvement projects. Now comes the tricky part. How are you going to pay for them?

You have several options, even in today’s challenging financial times. The difference today is that you face more scrutiny when borrowing and might have to get a little creative with home improvement financing.

Cash for Home Improvement?

According to The National Association of Home Builders, cash is often the best option. Before rolling your eyes in disbelief, consider that there are several ways to come up with cash, including:

  • Setting aside a specific amount every month for the next year. $500 per month leads to $6,000, enough to spruce up the bathroom.
  • Taking advantage of no interest financing for 6 to 24 months through home improvement and other stores. Just remember to pay it off on time to avoid paying interest. Put money in savings each month and then pay it all off on time.
  • Paying for part in cash. Let’s say you have $2,000 in savings that isn’t your critical “emergency fund.” If your home improvement projects total $8,000, spend the cash and you only need home improvement financing for $6,000.

According to Bankrate.com, the solution should be based on your long term financial picture. For some, that could mean borrowing from a 401K or insurance policy. For those close to retirement, a more cautious approach is best.

Home Equity Loans or Lines of Credit

A home equity loan or line of credit is often a good option for those who have at least 20 percent equity in their home. You also need good credit in today’s lending environment, but rates are at historic lows. Here’s a good chart from Wells Fargo that can help you compare the two options.

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  1. 6 Responses to “Add Some Cash to Your Home Improvement Financing”

  2. Carol
    Nov 4, 2010

    When saving, any additional money coming in such as bonuses, commission, or overtime will help you reach your goal quicker or pay off a no interest loan in a shorter amount of time. Either way you are not out of any additional funds.

  3. jamie
    Nov 4, 2010

    Good luck trying to get a HELOC loan right now. Banks don’t want to lend on owner’s equity until the real estate market settles. Until you can figure out the value of your home, you can’t determine the amount of equity you have in it.

  4. Allison Millar
    Nov 5, 2010

    You’re right. It is tough, but if you can find a lender who will be flexible, that’s golden. The key is to get them to look at your house individually instead of lumping it into the whole neighborhood. Also ask them what you can do to improve the value– perhaps it’s waiting for the market to improve, but perhaps there are inexpensive fixes you can do.

  5. Nov 10, 2010

    Allison, thanks for offering homeowners this advice on paying cash for home renovation projects. Homeowners making aging in place or universal design improvements might investigate eligibility for cash grants. Check with insurance companies because some of them cover adaptive modification. Other possible sources for financial assistance with these projects are Rebuilding Together, the VA, and local agencies on aging.

  6. Allison Millar
    Nov 11, 2010

    Thanks for the tip!

  7. sweez
    Oct 25, 2011

    I’ve remodeled about 5 homes so far and instead of bringing old cabinets, toilets, etc to the dump I put them on Craigslist for sale. I usually don’t get to much money for them but I don’t have to take them to the dump or pay a dump fee. You will be suprised at what some people are looking for.

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