If you’re looking to remodel your house but are strapped for cash, there are other ways you can pay for your repairs. Before you run out to get a personal loan, here are five tips you can use to refinance your new home remodeling.
1. Get an FHA 203k loan.
If you’re recently purchased your home, or you’re looking at a house that needs a little work, an FHA 203k loan may be perfect for you. With this loan, you can make major repairs and lump your mortgage all in one payment. You’ll have to work with a Federal Housing Association agent to approve all repairs and choose a contractor, but it can be a good way to get that perfect kitchen or bathroom you’ve always dreamed about.
2. Consider a home equity loan.
If you already own your home, you can capitalize on the equity that’s already in your house. You can choose to get one giant lump sum similar to a mortgage, or you can get a home equity line of credit (HELOC). While this will put a second lien on your home, you’ll be able to make the repairs without draining your savings account.
3. Refinance your mortgage.
Refinancing your mortgage can be beneficial, even if you aren’t looking to remodel your home. It’s a great way to lower your interest rate, but you can also finance your home remodel using the extra money. When you refinance your home, you’re throwing out your previous mortgage in favor for one that has a better interest rate or terms.
4. Consider a Title 1 Loan.
A Title 1 Loan is another loan that’s offered by the Federal Housing Association as a way to provide consumers with the opportunity to make affordable improvements to their home. With this, you’re able to get a loan of up to $25,000 for a single-family home as long as the lease extends six months passed the date the loan must be repaid. One of the benefits of a Title 1 loan is that you don’t need to place a second lien on your house like you would if you were to get a home equity loan or line of credit.
5. Look into government incentive programs.
There are many government incentive programs available for people who are wanting to make their home more energy efficient. This remodeling can include anything from getting solar panels to Energy Star appliances. Replacing your roof, water heaters, windows, and doors are just a few other things you can do to improve the energy efficiency of your home—government incentive programs will pay 10%-30% of the cost of various improvements. Not only will this save you money immediately, but you'll also save in the long run with energy efficient appliances.