Originally published: November 29, 2021
If you’re in the midst of choosing whether the return on investment down the road makes up for the astronomical price of an upfront remodel, you’re not alone. Many homeowners across Los Angeles hope to increase their property values with potential renovations, while some just want to make a house they own their perfect-for-them forever home. That said, whenever someone brings up a home renovation, a refinanced mortgage is usually quick to follow. We’re happy to let you know, this is not the only way you can budget for your next project. In this blog, we’re sharing tips on managing your money effectively for your next home improvement budget.
Dip into those savings:
Whether you’re a budgeting guru or have rainy-day funds already covered, extra savings should and can be spent on renovations for your home. This doesn’t have to be an investment in hopes of selling your house for more than you bought it for. Even if you’ve found your forever home, you have every right to make it perfect for you and your family by financing your remodel project with your savings. The best part of paying with cash is loans, fees, interest, and more are completely avoided!
Personal loans:
Don’t get scared by the title, personal loans are relatively small in amount and can be paid back in a much shorter time frame. While the interest rate of personal loans may be higher than your mortgage interest, they will likely still be smaller than credit card interest.
Credit cards:
Again, the idea of putting your home remodel on a credit card will seem scary at face value. But the interest rates will not begin to skyrocket if you pay back these amounts sooner rather than later. Many credit cards offer little or zero interest, and paying this money back before the low-interest rate period ends can be an easy way to make a home remodel affordable.
We’re not going to advocate for any particular loans but also want to offer some easy ways you can begin budgeting for your next project if you use any of the above-listed options.
- Set your defined budget: Shop around, get quotes for projects, and set a budget for the materials you can provide contractors working in your home! This also includes figuring out living expenses you’ll rack up while certain areas of your home are under construction. If you’re installing items, consider the installation, delivery, and labor costs, before you get started.
- Provide yourself a cushion: Most financially savvy homeowners know this tried-and-true rule, save 10-20% of your available funds outside of your defined budget for unexpected costs. Regardless of how much money you’re told the project will cost, unexpected time delays, lumber shortages, and labor shortages can increase the overall cost of your project.
- Consider purchasing previously used items: While Facebook Marketplace, Craigslist, and any local second-hand shop may not be the first options that come to mind for appliances like refrigerators or washer and dryer units, the environment, and your pocket, will thank you for buying second-hand.
The debate is always split, when trying to make a home renovation dream come to life, do or don’t you refinance your home’s mortgage? The most important part of this long-held debate is that it’s never your only option. Even if money is tight, you don’t have to just be strategic about what you want your home to look like when you’ve already fallen in love with it. So if you’re beginning budgeting, already have, or are considering these alternatives, we hope the above tips can help move along that process for you.
