Financing Home Repairs? Think About These 4 Things First
Spending time at home during the pandemic may have brought a few areas of improvement into sharper focus than ever before. Those creaky stairs and outdated kitchen cabinets probably seem a lot more bothersome now than they did before. If home improvement or repair is on your mind, you may already have looked at some funding options such as home improvement loans or home equity loans. But before you take the next step, think carefully about some of the factors that will influence your borrowing. Here are some top factors to consider:
Is this home improvement project a need or a want?
If you’re looking to repair some damaged pipes or a leaky roof, then your project is in the “need” category. But if you’re looking to make aesthetic changes such as new landscaping or a kitchen remodel then your project may not be urgent or essential. This may influence your view on whether to borrow money to complete the project or whether to save up the funds. Essential repair work that makes your home safer and more livable may be a bigger priority that justifies taking out a loan. On the other hand, if you have existing debt or are currently stretched thin financially, you may not want to borrow money just to make cosmetic changes to your home.
What is the scale of the project?
Is your project one that requires significant structural changes to the home? Or are you seeking a fresh look that can be obtained with small tweaks? You can talk to a contractor or conduct some online research to get an estimate of what your desired changes will cost. Knowing how much money you need may help you decide on the best way to secure the funds. A small project that’s not urgent can be postponed until you’re able to save up for it. For urgent small to medium projects, you may consider getting a 0% APR credit card, or borrowing against a universal life insurance* or whole life insurance policy that you may have. For larger projects, a home equity loan or line of credit may be necessary.
Can you DIY the changes you want?
If you’re looking to jazz up a space rather than make major changes, then consider DIY. For instance, you can change up the look of your kitchen by replacing the cabinet hardware and painting the walls and cabinets. Even the backsplash can be updated with stickers that are available online. These are relatively small and simple tasks that can make a big impact. If your project involves plumbing, electrical wiring, or any similar elements, it may be best to consult a professional.
What is the purpose of your project?
Some homeowners take on renovation or remodeling intending to increase the value of their home. If this is the case for you, then it may help to focus on making the home hospitable and attractive while keeping costs low. If possible, get a realtor’s advice on the changes you’re planning to make. Splashy additions like a total kitchen remodel or a swimming pool may boost the home’s value, but these projects are often for personal enjoyment, as sellers are less likely to recover 100% of what they spent.
*The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.
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