When it comes to home improvements, many homeowners have ideas for how they would like to make their home better — but may also have plenty of reasons why they should avoid doing so. For instance, they may be concerned about long-term value and short-term finances.
Fortunately, there are more ways than ever to pay for home improvements in a way that not only benefits one’s home but one’s finances. In fact, HELOCs, or home equity lines of credit, remain the top option for taking on this journey. We’ve helped analyze a variety of factors for you to examine to make the best financial choice.
Why Perform Home Improvements?
While most people think long term gains when it comes to home improvements, there are other motives for doing so. For example, doing so can lead to a more comfortable home for one’s family and higher quality of life overall. If you are tired of only having one bathroom for a large family or finally want to make the dive into more energy-efficient appliances, now is a better time than ever. The current climate has found more people working and spending time in their homes, so it’s finally time to make use of it.
Ways to Finance Your Home Improvements
As for financing your renovations, there are the common suggestions — mortgage refinances, credit cards, governmental loans, and home equity loans. But perhaps the best option remains home equity lines of credit (HELOC). While similar to home equity loans, HELOCs are different in that they are like a credit card in which you have a line of credit you can pull from for a set duration of time. With home equity loans, you usually only receive a lump sum of cash, limiting what is available to you, a detriment when it comes to home renovations.
Benefits of HELOCs
The benefits of a HELOC over other types of financing are wide and varied. First, HELOCs tend to have fewer closing costs, lower interest rates and interest charged only for the money you actually use. The initial draw period for HELOC loans typically lasts for ten years, where you can use the funds as needed — perfect for home improvements, which tend to take a good amount of time and also have fluctuating costs.
The question then becomes who are the best HELOC lenders? In 2021, there are several standouts. After you review a guide that analyzed a variety of factors such as interest rates, fees, and credit lines, you can make your determination on what best meets your needs in order to secure financing on the home improvement project that you’ve been waiting for.
Just remember that although it’s a line of credit and you have access to continue to take draws as-needed, remember that you do have to start paying back at some point so it’s important to try and stay within a budget, as difficult as that can be. The line does come in handy when an unexpected issue does occur and can provide you with the extra financing that you did not intend on.
*Photos by Nataliya Vaitkevich