Finding a qualified contractor for a home improvement project is
painless. On the other hand, financing a home improvement project often poses
a challenge. If you own a home, you will likely need to make necessary
home repairs in the upcoming future. This could be replacing the
siding, windows, roof, etc. Because the average homeowner does not have
thousands of dollars in disposable cash, most will finance the project.
Home Equity Loans and Home Improvements
There are several ways to finance a home improvement project. One
method involves taking out a second mortgage on your home. Commonly referred
to as home equity loans, second mortgages allow homeowners to borrow
money against their home's equity. Because of a booming housing market,
some homeowners are able to borrow tens of thousands of dollars. The
interest rate on home equity loans is reasonable, and the funds are repaid
within a few years.
Low Interest Rate Retail Credit Cards
If a local home improvement retailer will be managing your home
improvement project, you may consider obtaining a store charge account. This
way, you can purchase all the necessary materials and pay the balance
over time. If your credit is good, you may qualify for a low interest
rate or 0% financing for the first 12 months.
Although obtaining a store credit card is convenient and tempting,
carefully weigh the pros and cons before applying. Can you realistically
afford another monthly payment? Furthermore, if you get approved for a
credit card, avoid spending too much money. If you have several home
improvement projects that need completing, payoff the balance incurred from
the first project prior to buying materials for the next project.
Finance Home Improvement Project with a Contractor
The majority of home improvement contractors offer financing. However,
the rates are higher and you can usually find a better loan package on
your own. On the other hand, if you are having a hard time securing
outside financing, accepting a contractor's terms is the next best thing.
Before choosing a contractor, get estimates from at least four other
contractors. You will save money by shopping around. Moreover, do not
accept an offer until you review a copy of the final contract. If you have
difficulty understanding certain terms or the language, opt to have the
contract reviewed by an attorney before signing.