How to Finance and Create Your Dream Home
Kids tearing your house apart? Have you been binge watching WAY too many home renovation TV shows? If so, you’re not alone. In fact, 76% of Americans are pining for a much-needed home makeover. Whether your house is starting to give off a Munster’s mansion vibe, or your inner home designer is struggling to escape, know this — you deserve a beautiful home.
But, you may be wondering, “Don’t home renovations cost an arm, a leg, and possibly other additional appendages?” The truth is, with a little planning and preparation, you could be well on your way to financing your dream home.
Here are some simple tips to pay for renovations that can turn your house into a home you love.
From new clothing to household items, food purchases and other expenses that are unplanned, the average person spends $450 on impulse purchases each month (or $5400 per year)! As you can tell, we spend a TON of money without even realizing it, and it’s easy to see where a little savings can go a long way toward your goal of fixing up your home.
Here’s how to save for your home renovation:
Try automatic savings.
Nowadays, there are apps and bank programs that can help you save by automatically transferring a portion of your monthly earnings into your savings account. Auto-send $50 (aka your weekly Starbucks bill) a month into your savings account and you’ll have an extra $600 by the end of the year.
Go out to eat less.
On average, Americans go out to eat about 4 times per week, resulting in roughly $232 in dining expenses each month. Cut out 2 visits to your favorite BBQ place each week, and you could save about $1400 per year.
Cancel your gym membership.
Has it been months since you abandoned your New Year’s resolution to get that summer bod? Well, no judgment here! But if you’re still paying for that pricy monthly gym membership, you’re doing yourself (and your home) a severe injustice. Save yourself $60 per month ($720 per year) and start taking your dogs out for a relaxing walk at the nearby park. They’ll appreciate it, and so will your wallet.
Have you been living in your current home for a while? If so, you may have been building equity (value) in your home all this time. What can you do with all of that fancy equity? Take advantage of it with a cash-out refinance, of course! With a cash-out refinance, you can tap into your home’s equity and free up cash for anything you want — especially home improvements!
How does it work?
Here’s a quick example:
Imagine you owe $100,000 on a $200,000 home and want to spend $10,000 on a home renovation. Well, you can refinance your original mortgage for $110,000, and pull out the difference ($10,000) in cash with a cash-out refinance.
Government Home Renovation Programs
Not quite ready to part ways with your monthly spending vices? Don’t have much home equity to tap into yet? Believe it or not, the federal government can give you a hand with your home renovation costs. For example, a FHA 203(k) loan allows borrowers to combine the cost of home repairs and improvements into their mortgage.
This is especially great for homeowners who have limited finances, and offers benefits, including:
•Low refinancing interest rates
•Fewer individual payments from combining costs into a single loan
If you’re interested in making simple repairs or improvements, the Section 504 Home Repair Program may be the way to go.
The U.S. Department of Agriculture Rural Development set this program up to help lower-income homeowners with basic renovations, so they can:
•Make their homes more energy efficient
•Bring their home up to proper healthy and safety standards
•Improve accessibility for residents with disabilities
For more information government-backed financing options, check out PrimeLending’s handy Home Improvement & Renovation Loans guide.
A home renovation isn’t always just a cosmetic process; sometimes it’s a symbol of growth. Whether your house needs a small update or a major makeover, there are several ways to finance and create a wonderful space for you and your family to grow in. Interior design icon, Suzanne Tucker, said it best, “As we evolve, our homes should too.”
Ready to help your home evolve? Contact a PrimeLending mortgage professional to find out how we can help you create the home you deserve.
All loans subject to credit approval. Rates and fees subject to change. Mortgage financing provided by PrimeLending, a PlainsCapital Company an Equal Housing Lender. ©2018 PrimeLending, a PlainsCapital Company (NMLS: 13649).