How to Finance Home Improvements
I
n this economic climate many homeown-
Sit down with a loan officer at your local
ers are opting to stay put rather than trying
bank to go over options with reasonable terms
to sell their homes in a buyer’s market. In
before committing to the renovations.
turn, they’re looking for ways to improve upon their home investment. Renovations to properties are continuing despite slow growth in the housing market.
CREDIT CARDS Paying for a renovation on a credit card can be a viable option for quick funds, provided
Renovations may bring about a return on
that you are of the mind of paying off the bal-
money spent if done right, but they do require
ance when the bill comes, and not carrying it
a preliminary investment of funds. The key
over from month to month. Otherwise, high
is finding the best way to finance home
finance charges on certain cards could end up
renovations.
costing you a great deal. Check the terms of your credit card. You may find incentive deals
CASH
for using your card at home-improvement retailers. Some cards also offer discounts on
closing on a home, again. You will need to factor
improvements, provided you have enough discre-
purchases if you make your purchase through
these costs into your loan.
tionary money in accounts to cover costs. You do
their site with one of their partners. This could
not incur any financing charges or interest, and
save you a percentage on the purchase and be
TITLE I PROPERTY IMPROVEMENT
will not be penalized for past-due credit payments.
well worth using plastic to pay.
LOAN PROGRAM
Cash is the most economical way to finance
According to the U.S. Department of Housing
It is a good idea to keep all of the receipts for purchases made toward home improvements. Though home improvements are typically not
HOME EQUITY LOANS/REFINANCING If you have been considering refinancing your
and Urban Development (HUD), if the equity in your home is limited, the answer may be an FHA
tax-deductible, certain improvements, such as pur-
home to take advantage of lower interest rates,
Title I loan. Banks and other qualified lenders
chasing energy conserving appliances and other
you may want to use a portion of your equity to
make these loans from their own funds, and FHA
environmentally friendly renovations, may be eli-
fund home improvement projects. For homeown-
insures the lender against a possible loss. This
gible for a tax credit. Your accountant or another
ers who are planning to stay in their homes for
loan insurance program is authorized by Title I
tax professional may be able to provide further
several years and do not mind starting from the
of the National Housing Act. FHA-insured Title
information regarding tax credits.
beginning again on a loan, home equity loans can
I loans may be used for any improvements that
be a way to free up cash now, and also benefit
will make your home basically more livable and
from lower interest rates.
useful. You can even use them for dishwashers,
PERSONAL LOANS If you do not have cash on hand, you may
Not all lenders have the same rates and terms
refrigerators, freezers and ovens that are built
want to take out a loan to finance the costs of
regarding home equity loans and the refinanc-
into the house and not freestanding. You cannot
improvements. Just weigh the advantages and
ing process. Request quotes from several lenders
use them for certain luxury-type items such as
disadvantages of the loan. Will the investment
to find a deal that works for your situation. Also,
swimming pools or outdoor fireplaces, or to pay
be worth the interest you will have to pay on
keep in mind that closing costs may be required if
for work already completed.
the agreement over the life of the loan?
you are refinancing, because essentially you are
8 | Home Builders Association
– Metro Creative Services
An advertising supplement to The Post and Courier