How You Can Finance Your Next Home Renovation?
By: John Garcia | Date Posted: January 28, 2023
Table of Contents
Viewing a home as an investment rather than a place to live can impact how you treat the home. Allowing a home to fall into disrepair can lead to losing money during the sale of the home. Most sellers do not want their home to be considered one that needs work as this can garner lower offers. A majority of buyers want a home that needs minimal work if any at all. The holdup for most homeowners is a lack of budget to have extensive renovations completed. Financing home renovations can occur in a number of ways, including borrowing or leveraging current assets. Below will analyze various ways to finance your next home renovation.
A Reverse Mortgage Can Be A Great Option (If You Qualify)
A reverse mortgage is not a traditional way that most people finance their home renovations. You have to be of retirement age even to consider this option. The beauty of this option is that you can still live in your home while receiving monthly cash payments. Receiving a lump sum payment is an option as well if you want to do massive renovations immediately. Look into the various restrictions and benefits of a reverse mortgage, as it could be the help you never knew you needed. The positive aspects of using a reverse mortgage to fund your home renovations include the following:
- You no longer have to make mortgage payments. You will have to have a certain percentage of equity in your home to qualify for a reverse mortgage.
- You can use the money for a new home purchase if considering a rental property.
- The funds are not limited to use for certain things like a home improvement loan would be.
- Residing in your home while being paid produces cash flow that a number of retirees need.
- Your line of credit can last for the rest of your life if you keep up your end of the obligations in terms of the reverse mortgage.
A reverse mortgage might not have been a tactic to fund renovations that you have considered previously. Take a deeper look into the process for a reverse mortgage. Reverse mortgage calculators can also allow you to see how much money you can expect monthly or in a lump sum. Keep in mind that reverse mortgages in Arizona might require different documentation or have a different process than in California or Florida.
Can You Earn Additional Income?
Earning additional income is an easy fix to generating the money for a renovation. Freelancing has become the norm for a number of professionals that want an additional stream of income. Leveraging the skills you already possess is going to be of paramount importance. These skills can be developed while you are being paid to complete various projects for clients. Do not forget to put money aside for income taxes unless you pay quarterly on your freelance income. Your income taxes can be estimated based on federal 2022 income tax brackets.
Asking for additional shifts or extra hours is another option. The drawback is that you will spend more time out of the house than freelancing online. Working an additional few hours weekly for months can start making a dent in the renovation costs at a consistent rate. Money put into the home is an investment rather than wasting it on entertainment options that only provide temporary relief.
Market research studies are widely available to participate in. While this will not offer a consistent stream of income for most, it can add a few hundred dollars here or there. For some of these studies, you can do them remotely while being paid with a gift card.
Put Your Home on Airbnb
Renting a home out for a few days or holiday weekends can be a great answer to earning. Allow your investment to pay for itself in terms of home renovations. Renting out the entire home will be the most profitable if you have family in the area you can stay with for a few days. Homeowners who have in-law suites can rent these out without worrying about their privacy being violated. Plenty of these suites have their own entrance without a direct entrance into the home. A pool house is another great option if you want to start renting to Airbnb customers or rent long-term.
Renting out a room to a family member who is a recent graduate can be a great idea. Rental prices are out of control, and most would not want to lease a room to a complete stranger. The money can be saved directly for the home renovations that you have planned.
Consider Payment Plans With Some Kind Of Loan
Payment plans can be so important with a home improvement loan. The truth is that interest rates are quite high right now, so this might not be the best option. There are even contractors that might offer some form of financing for the project, depending on its size. A home renovation like that of the addition of solar panels might come with local or federal government grants.
Renovations that also help save a family money monthly should be added to the equation. Solar panels are a perfect example, as mentioned above. You can eliminate your electricity bill while selling excess power garnered to the power companies. Limitations apply as it seems like utility companies and local municipalities want residents on the power grid despite the strain on the environment.
Start Saving More Monthly
Creating a budget might not be something that you have done in the past. Saving money seems impossible while most are in the fires of massive inflation in the US. Saving more might require sacrifices or shopping in a more intelligent manner. Targeting areas like entertainment can make the largest difference in the shortest amount of time. Lowering budgets for areas like groceries might take shopping-only sales. Those who live close to a grocery store can go daily to see what might be on sale for far less.
Home renovations can help maximize your investment in your home. Take the time to create a list of renovations that you want in the near future. Saving for these improvements becomes much easier when you have a specific renovation in mind.
Thank you for reading!