With most Americans spending more time at home than ever before, it’s a good time to renovate, extend, or rebuild. Unfortunately, costs continue to head upward; financial experts Bloomberg note that construction work is more expensive than it ever has been. As a result, many homeowners are looking to find that extra little bit of capital to help them fund their renovations. There are two ways about this – looking at where you can squeeze money out of existing ways of financing, or looking at your development as an investment.
Maximizing your returns
The most common avenue for financing a renovation is through the home itself. A cash out refinance for home improvements is something to consider, as it will provide income immediately, enabling you to get your renovations moving. Furthermore, as highlighted by CNBC, cash out refinancing often offers the best rates compared to other forms of credit – though, typically, only on homes where 20%+ equity is owned. Other options include the HELOC and simple remortgaging. Diligent homeowners with low rates and a high equity level will benefit most from such schemes and will often be able to attract a better deal from lenders, too. This is the most straightforward plan, and you can look at renovations as a way to reinvest your money.
Renovation as an investment
There are multiple benefits to renovation. Statistics analyzed by Fortune Builders reveal that even a minor bathroom remodel can have a return on investment of 102% in the final valuation of a home. Landscaping, kitchen remodeling and attic conversions follow closely behind. Essentially, you can view the money you put into the renovation as something you’ll get back out at a later date. House valuation is beneficial even if you don’t plan to sell – it can open the door to more improvements in the future, including better rates on lines of credit and other sources of cash flow.
Local subsidies
In addition to private credit there are a wide range of subsidies available at state and federal level. As the government website outlines, certain groups are eligible for subsidies on home renovation due to various factors. That can include being part of a disadvantaged group, or being an owner of a property identified as requiring renovation. All homeowners have eligibility through the 203(k) Rehabilitation Mortgage Insurance Program for instance, that allows extra borrowing based on the mortgage. The limit of this runs up to $35,000, and is held against your mortgage, but can be highly beneficial if you want to undertake wide-ranging renovations to your property. This might be necessary if you have an older property that falls under the categories stipulated by the government.
Being creative and finding ways to make your finances work for you is a key part of the home renovation process. As renovations become more expensive, it’s an important thing to take into account. Your home can be a solid credit vehicle in itself, but don’t be afraid to turn to the authorities for further assistance – and remember, you’ll get out what you put in.