Affordable home renovations

Remodels and home renovations can be costly.  How do I afford it? You may ask yourself. Remodeling your home can add value and living ease to your family life while you enjoy an upgraded home. You also can earn your home energy rebates and lower monthly bills.  But rebates and incentives aside, you still have to come up with the money to pay for the job. Here’s a rundown of your options and their pros and cons.savings account Cash If you have the money saved for a rainy day, or in this case a home remodel, Great! But if you have a substantial sum in a high-interest investment account or mutual fund, withdrawing it in order to finance a renovation may not always be in your best interest. Make sure you measure the loss in any interest that you would have earned had the money stayed in your account. Using cash though can save you interest on credit cards and loans. Do your research before you cash in your savings.

credit cards Credit card

Of course there are good and bad side to using your magic plastic credit card. On the plus side, you can pay off as much or as little as you like each month without penalty and if you have an existing card with a high enough credit limit and low or no interest, you can skip the hassle of waiting for a loan approval. However, there’s a price for all that convenience: interest rates are generally much higher than with other types of loans and a maxed-out credit card carries a range of problems, from a lowered credit rating to the beginning of a debilitating debt spiral. Some banks offer “secured” credit cards with lower interest rates, but for larger amounts, you still may be better off with a conventional loan or line of credit.

Bank loan Let’s talk about bank loans. A bank loan is a good way to get a large lump sum when you don’t have the option of using cash or credit cards, or they cons out weight the pros on using other resources.  Fixed repayments are withdrawn from your bank account at regular intervals, such as weekly, biweekly or monthly. If your budget allows, try to arrange weekly payments. Since the repayment total equals the sum of the principal and accrued interest, over time weekly payments can reduce this amount much more quickly than a single monthly payment, without costing you a penny more.

The are other options such as a reverse mortgage or mortgage re-financing, check with a financial advisor and consider all the possibilities before choosing your route of financing a remodel.