Debt-free Home Improvement: Is it Possible?

Your home is not only one of the biggest assets that you will ever have in your life, but it can also be one of the biggest investments that you will ever make. This is why renovations and improvements are so important. Whether it’s for comfort, fixing a safety issue, or prepping your home for sale, home renovations and improvements are necessary to keep your humble abode in tiptop shape.

Taking on any home renovation project, however, can be a daunting task, especially in the financial aspect. Let’s face it: home improvement projects are costly and money isn’t always at your disposal to fund home maintenance. Those who can’t readily afford to pay for any urgent home repair that needs to be done will resort to taking out a personal loan, borrowing from their 401k or tapping on a home equity line of credit or HELOC.

If you are one of the thousands of homeowners who are considering this option, better think again and ask you this question: do you really need the additional burden of debt to finance your home improvement project?

There is no such thing as good debt.

Whether you call it good or bad, debt is still debt. When you take out a loan for whatever purpose, you are literally spending money that you don’t have and pay it back with interest.

Whether you call it good or bad, debt is still debt. When you take out a loan for whatever purpose, you are literally spending money that you don’t have and pay it back with interest.

There are several creditors offering home improvement loans but these are just run-of-the-mill personal loans intended for home improvement projects. With interest rates that could go as high as 36%, these type of loan can hurt your finances in the long run.

Tapping on your 401k to fund the renovation is not a good idea either. Not only will it leave you high and dry in your twilight years, but you will also be charged origination fees that could start from $75, depending on the provider.

Some may argue that borrowing from a home equity line of credit is the best option to fund home renovations. HELOC is easier to obtain than most loans if you have enough equity in your home and have an impeccable credit history. The average interest rate for HELOC is also far lower at 6.75% compared to that of a credit card which can be as high as 17.78%

But while HELOC appears to be less expensive than a personal loan, its interest rate is variable which means that your monthly payments can be unpredictable. If you fail to repay according to the loan terms, your credit will be severely damaged and since HELOC uses your home as collateral, failure to repay would mean losing your home to foreclosure.

There are several creditors offering home improvement loans but these are just run-of-the-mill personal loans intended for home improvement projects. With interest rates that could go as high as 36%, these type of loan can hurt your finances in the long run.

Tapping on your 401k to fund the renovation is not a good idea either. Not only will it leave you high and dry in your twilight years, but you will also be charged origination fees that could start from $75, depending on the provider.

Some may argue that borrowing from a home equity line of credit is the best option to fund home renovations. HELOC is easier to obtain than most loans if you have enough equity in your home and have an impeccable credit history. The average interest rate for HELOC is also far lower at 6.75% compared to that of a credit card which can be as high as 17.78%

But while HELOC appears to be less expensive than a personal loan, its interest rate is variable which means that your monthly payments can be unpredictable. If you fail to repay according to the loan terms, your credit will be severely damaged and since HELOC uses your home as collateral, failure to repay would mean losing your home to foreclosure.

Renovate, maintain, and repair your home without debt

Owning a home is a huge responsibility. It means you are committing yourself to long-term financial obligation. It doesn’t just end with you paying your mortgage on time. Renovations, repairs, and maintenance are inevitable and an integral part of caring for your home. But while a substantial amount of money is needed for these projects, it doesn’t mean that you need to rack up more debt just to get the funds you need.

If you are already in debt, take action immediately. Debt settlement services and debt negotiation can help you balance your goals and your finances without driving yourself deep in debt. The sooner you pay off your debts, the sooner you will be able to have more money available to set aside for any home improvement projects you may have in mind.

Having your home checked regularly can also help you reduce your expenses in the long run. Take time to inspect every nook and cranny of your house and see if there’s anything that needs fixing. The most expensive home repair issues such as foundation problems, water damage, electrical issues, and molds can be easily prevented if caught early on and at a much lower cost.

Lastly, if you are aiming for a major sprucing up on your nest, open separate savings account dedicated to your home improvement and renovation goals. While it’s okay to go big and redo an entire room or even your entire home, it’s also perfectly alright to scale down and focus on other necessities at home. A fresh coat of paint and replacing some fixtures in your kitchen cabinets will give it a whole new look. There are millions of DIY home projects on Pinterest that you draw inspiration from and do at a fraction of the cost.

Bottomline

Caring and maintaining for your home doesn’t have to be financially draining and you don’t have to bury yourself deep in debt because of it. With your finances all in order and enough savings, you will be able to finance your dream home makeover project without having to rely on home equity loans and other forms of debt.

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