Home improvement projects tend to take a considerable amount of resources. This is why you need to be aware of the different financing options available to you. Here’s a quick overview of different ways to finance your home improvement project.
1. Personal Savings
This one’s fairly straightforward: you use funds that you have personally saved over some time. This method of financing is excellent if you want to avoid large interest rates. The only downside is that saving enough to fund a home improvement project can take a very long time. In fact, large scale projects could be well out of the reach of a typical homeowner’s personal savings.
2. Home Equity Loan
One of the more popular options for funding, home equity loans are one-time financing options that have a fixed rate interest. The amortization schedule is on a fixed monthly payment. A home equity loan is ideal for a single major-scale project, but you can’t use the same funds on a different project.
Home equity lines of credit (HELOCs) are more flexible versions of a Home Equity loan. Instead of having fixed interest, a HELOCs interest only accrues when the loan is opened. This type of loan can be used for multiple projects (as long as the loan is open), but the variable interest rate may cost you more in the long run.
4. Construction Loan
Reserved for the biggest home improvement projects or even total home constructions, construction loans give out the total amount borrowed in separate installments (within the project’s timeline). The borrower will only pay the interest during the duration of the project. Once the project is completed, it’s possible for the loan to be rolled over into a mortgage loan.
Learn more about your home improvement financing options. Twin Cities Siding Professionals is the leading home improvement contractor in Minneapolis and St. Paul, MN, as well as other areas near the Twin Cities. Call us at (651) 967-0873, or fill out this contact form to request a quote.