6 Smart Ways to Pay for Home Improvements

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Home improvement
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Thanks to the coronavirus pandemic, we’ve all spent more time at home than usual over the past couple of years — and many of us have found reminders of things we wish were a little different, bigger, brighter or simply better.

Of course, home improvement projects are rarely cheap. According to recent research, more than half of homeowners planned renovations for 2021, with the median budget being $10,000. The most popular kind of project reported was a kitchen remodel.

Even for the most urgent home improvements, that’s a lot of money to come up with. Projects can get put off for months or years, and every glance at the unrealized space in your home gets a little more wistful.

Fortunately, there are several ways to approach a big expense like this, particularly if you have time to plan for it.

Here are several smart ways to get your next home improvement project rolling and make it a reality sooner than later.

1. Put your cash to work

Cash remains king when it comes to home improvement projects, favored as the form of payment for more than four in five home renovations.

It’s quite likely that decreased travel and commuting costs, coupled with stimulus checks and tax refunds, contributed to the continuing popularity of this option.

That’s not to mention the fact the pandemic scared many of us into taking a smarter, more careful look at our spending priorities, which could lead to finding some extra money for things that really improve our quality of life in the long run.

Still, $10,000 in cash is far from pocket change, and it’s very understandable if you don’t have that kind of money lying around these days. Fear not: While cash is the most popular option, it’s far from the only one. You can combine any amount of cash with the following routes.

2. Let this company get you a low-interest loan

Another smart but often overlooked way to approach a big home improvement project is through a personal loan.

Before you decide on a loan or rule out the option, take a look at the free website Credible. You can use Credible to get real prequalified rates on loans from multiple lenders in a snap for amounts from as little as $600 to as much as $100,000. There are no hidden fees or gotchas: Checking rates won’t affect your credit score, and the company won’t sell your information.

It’s just a quick, painless way to find a low-interest loan to get your home improvement project started.

It’s totally free to check your rate online, and it only takes two minutes — so give it a shot.

3. Tap your home equity with a cash-out refinance

Another approach that might work for your next home improvement is to use your house itself to finance the upgrade.

Using a cash-out refinance, you can tap your existing home equity for a low-interest loan. When used for a capital home improvement — projects that make your home last longer or increase its value — this money can be tax-deductible.

A great option for a cash-out refinance for home improvements is Rocket Mortgage, the top-rated online lender. In just a few clicks, you’ll be able to see a potential cash-out offer with all the key terms including your new monthly payment and interest rate.

Within a few days after closing, you can have the cash you need to get started on home renovations.

If you’re ready to take advantage of the equity you’ve built, get started now.

4. Use a 0% APR intro card

Another popular option for funding home improvements — second only to cash — is credit cards. This is particularly true for smaller projects.

The upsides of using a credit card are that in most cases (we’re assuming you have a credit card) you aren’t taking out a new loan to worry about and you’re already familiar with your lender and interest rate. You can also earn some hefty cash-back or travel rewards in the process, which might offset some of the sticker shock of your project.

Of course, credit card interest rates can be high, and if you’re considering this option over cash it’s probably because you don’t have the money to pay it all off at once. That’s why it makes sense to charge the whole project to a 0% APR credit card.

A credit card with a strong 0% APR introductory offer can give you a lot of wiggle room to get your project paid off before any interest charges factor in. With the right card, you can get your project finished and work on paying it off over the next year and a half worry-free.

If you have good or excellent credit, it’s time to make use of it. Check out these top 0% APR cards, and stop paying interest for up to 18 months.

5. Get a great low rate with a HELOC

If credit card interest rates seem too high and a cash-out refinance won’t work for you, consider a home equity line of credit (HELOC). This is another smart way to tap the existing value of your home to upgrade it.

Our top choice for a HELOC is Figure, which has a 100% online application that can be approved in five minutes and get your project funded in as few as five days. With rates as low as a 3% APR, this can be a very attractive option — and you can see an offer without affecting your credit score.

If you’re ready to unlock your home’s equity, apply online now.

6. Check out government loans

Here’s one last smart option to consider: government loans. The federal government, as well as your state and local governments, might have more resources for home improvements than you think.

The U.S. Department of Housing and Urban Development has an entire section of its website devoted to home improvements, highlighting different types of loans for repairs and property improvements as well as providing a list of HUD-approved lenders.

People in certain circumstances — for instance, households with low income and those looking to improve their home’s energy efficiency — may even be eligible for grants they don’t have to repay.

Before you dive into a project, be sure to consult all the resources available to you. There may be more help out there than you’d expect.

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