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Q: I’m planning to renovate my house, and I’m wondering about my financing options. What’s the best way to pay for a home improvement project?

 

A: Home renovations can breathe new life into your living space, enhance your property’s value and customize your home to satisfy your unique needs. Whether you’re upgrading the kitchen, adding a new room or tackling long-overdue repairs, funding the project can be the most significant consideration. Fortunately, there are financially responsible ways to pay for a home renovation.

 

Here’s a complete guide to help you choose the best option.

 

Before exploring financing options, take a moment to outline your renovation goals and calculate the total costs. Are you doing a minor upgrade or a major remodel? Gather estimates from contractors and research material prices to establish a realistic budget. Once you know your renovation’s scope and cost, you can determine how much financing you’ll need.

 

For smaller renovations or updates, tapping into your savings can be the simplest option. Paying with cash allows you to avoid debt and interest charges. If you’re considering this route, evaluate your emergency fund to ensure you’ll have enough left for unexpected expenses after covering the renovation costs. The best part of using savings is that you’ll be done making payments on the project when the work is complete instead of paying it off for months or years to come.

 

Home equity loans are one of the most popular ways to finance major renovations. These loans allow you to borrow against the equity you’ve built in your home, which is essentially the difference between your home’s market value and the remaining balance on your mortgage.

 

The benefits of choosing a home equity loan to fund your home renovation include locking in a fixed interest rate and having predictable monthly payments throughout the loan term, as well as lower interest rates than credit cards or personal loans. The funds are also disbursed in one lump sum, which makes them ideal for homeowners who are looking for capital to cover a single home improvement project.

 

If a home equity loan sounds like it might be for you, we can help! Call us at (973) 576-2000 or visit GardenSavingsFCU.org to learn about your options today.

 

Another great option for funding a home renovation is a Home Equity Line of Credit (HELOC). This type of loan works much like a credit card by allowing you to borrow funds as needed during a draw period that generally lasts five to 10 years. This flexibility makes HELOCs ideal for ongoing or phased renovations.

 

The advantage of using a HELOC for your home improvement needs is that you’ll only borrow what you need, when you need it. You’ll enjoy lower rates compared to personal loans and credit cards. Plus, you’ll only be required to make payments on the interest during the draw period (but you are encouraged to pay more than that if it works within your budget).

 

If you’d like to open a HELOC to pay for your home renovation, we can help! GSFCU offers HELOCs with no application fee, no closing costs, and favorable interest rates starting at just 5.99% APR* for the first six months*. Call, click, or stop by today to learn more.

 

 

If you don’t have enough equity in your home for a HEL or HELOC, or you’d prefer not to tap into your home’s equity, a personal loan may be your solution. These loans don’t require any collateral, which means you don’t need to have accumulated equity in your home or to pay for an appraisal. The loan will have fixed interest rates and terms to go with a faster approval process when compared to equity-based loans. As loans with no collateral, they tend to have higher interest rates than loans that are backed by equity, but at GSFCU, we offer personal loans with favorable rates. Speak to an Member Service Representative today to find out more.

 

Choosing the best means for financing your home renovation can seem daunting, but the options available through GSFCU make it simple. Use this guide to learn about the various ways you can fund a home improvement project and reach out to us at (973) 576-2072 to learn more.

 

 

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