You've had it with the boxed-off first floor. You're ready for culinary ease or a spa-like bathroom experience. If the time to remodel your home has come, no doubt you have two main questions on your mind. First, how much will my remodel cost, and second, how to pay for home renovation?
Creating a budget for your home improvement project in Fresno, California, is a nuanced process as you search for the balance between assessing how much custom home remodeling realistically costs and what you can afford. You won’t know the exact price of your project until you’ve completed design plans and worked out a contract with your home remodeler. However, it’s important to consider your finance options for home renovations early in the process to ensure you’re making informed decisions.
How to Pay for a Home Remodel
What's the best way to pay for a remodel? The pros and cons of each way to fund your home renovations will weigh differently depending on your circumstances. As you work on your preliminary budget for your bathroom or kitchen renovation or a whole home makeover, it’s time to evaluate your financial situation critically. It’s also important to assess what funding sources are available to you in California and which are preferable based on your circumstances. You may have more options for financing your remodel than you think. Here is a brief look at some of the best ways to finance home renovations in Fresno.
1. Personal Savings
As with most investments, the more you can pay out-of-pocket for your home renovation, the better. You don’t have to worry about accruing interest or paying back the money. However, consider the overall estimated expense of your project and how long it will take, as well as other personal and professional factors. Should I pay cash for home improvements? It depends on your financial flexibility—draining your savings could leave you vulnerable to unexpected expenses.
Wondering how much the remodeling project you've got in mind for your Fresno or Clovis home might cost this year? Start with the information you need. Find local, updated costs for our most popular projects here.
2. Home Equity Lines of Credit
Getting a loan to remodel a bathroom, upgrade your kitchen, or renovate your whole house can be the best call, but you should be familiar with the distinctions between different types of financing before selecting which one is right for you. One of the most popular types of financing for residential improvement projects is a home equity line of credit (HELOC), a type of secured loan backed by the value of your home. You are given a revolving line of credit, similar to a credit card, that you can draw from when you need it. HELOCs are often considered desirable for large or ongoing home improvement projects due to this flexibility. The one caveat for using equity to remodel is that you must have enough equity in your home to qualify, which means the value of your house in Fresno should be higher than what you still owe on your mortgage.
3. Home Equity Loans
Home equity loans are similar to HELOCs because they also use your house as collateral. In contrast, you are offered the funds in one lump sum, which gives you less payment flexibility than you have with a HELOC. On the flip side, you’re also less susceptible to market fluctuations. A common question homeowners ask is: Home improvement loan vs home equity loan—what’s better? A home equity loan is a good option if you have a clear estimate of your renovation costs, while an unsecured home improvement loan offers more flexibility without using your home as collateral.
4. Home Improvement Loans
Unlike HELOCs and home equity loans, home improvement loans are unsecured personal loans you can get from a bank, credit union, or even an online lender. You don’t have to use your home's equity as collateral; instead, you are approved for a certain amount and a set interest rate based on your credit score and the terms you've agreed upon with the lender. Once approved, the money may be deposited into your bank account within a day or two. This is often the best way to finance home renovations for smaller or midrange projects with shorter repayment schedules.
5. Mortgage Refinances
In some cases, you can refinance your home to remodel, which gives you a new interest rate. Additionally, if your new loan is bigger than your existing one, you can use the difference toward the cost of a kitchen remodel or home renovation. There are a few important things to consider before going this route. First, you’ll have to pay for an appraisal, taxes, origination fees, and other closing-related costs. You will also likely be extending the life of your loan. Depending on when you secured your first mortgage, rising interest rates in the last few years may make this option less savvy than it may have been under different market conditions. Homeowners often wonder, which is better, a home improvement loan or a refinance? The answer depends on how much equity you have, current interest rates, and your long-term financial goals.
6. Credit Cards
You can also use a credit card for smaller projects, such as installing a new closet or replacing your windows. If you get a new line of credit with a 0% introductory APR and can repay your expenses promptly, you can potentially fund your project without interest. Some credit cards come with great perks and rewards for users and some home-improvement credit cards may come with more favorable terms than typical credit cards. There are also risks associated with relying on credit for a lengthy or major home remodel, particularly exorbitant interest if you can’t pay back the full amount in the designated period.
7. Government Loans
Lastly, you may qualify for homeowner grants for home improvement or low-interest loans to help finance your project. For example, the U.S. Department of Agriculture Rural Development’s Section 504 Home Repair program provides loans to low-income homeowners in California to improve, repair, or modernize their homes. The program also distributes grants for elderly homeowners to remove health and safety hazards at their residences. Currently, California is participating in a pilot program that increases the program limits, which means there are loans available up to $40,000 (up from $20,000) and grants available up to $10,000 (up from $7,500). The VA Renovation Loan allows eligible military personnel to refinance their home. Eligible military personnel, reservists, and veterans can borrow VA home improvement loans to refinance their home and include remodeling costs in the loan amount while enjoying no down payment, minimum credit score, or mortgage insurance. FHA 203(k) Loans let homeowners roll renovation costs into their mortgage, making them a great home loan for renovation option. Checking with local and state programs can also uncover potential financial assistance.
8. Contractor Financing
Some remodeling companies offer finance options for home renovations through third-party lenders. These programs often include promotional rates such as 0% renovation loan interest for a limited time or flexible payment plans. If you’re considering financing a home addition, working directly with your contractor on financing options could make your project more affordable.
Unforgettable Home Remodeling in Fresno and Clovis
As you’re planning your home remodel in Fresno, speaking with a financial advisor or your primary bank or credit union to discuss your funding options and the pros and cons can be helpful. Your remodeling contractor can also provide insight into the costs associated with bathroom, kitchen, or whole home remodeling. Imagine Remodeling prioritizes transparency and communication to help you accomplish your renovation goals within a budget that works for you. Reach out today to start the conversation that ends in your dream home. We cannot wait to meet you.
