Featured photo by Michael Browning on Unsplash
Do you want to provide a break room complete with a fully functioning kitchen for your employees? Something with every detail considered, like the best pull out kitchen faucet? Or perhaps you want to start that kitchen remodeling project you’ve always dreamed of at home. In either case, where will you get the money?
A kitchen remodel can easily cost you thousands of dollars, but it also has a huge impact on the overall value of your home. Do it right and you can expect to add some pretty nice value to your home. But first, here are three financing options to ensure you won’t end up broke after building your dream kitchen.
RELATED ARTICLE: WHAT YOU NEED TO KNOW ABOUT A HOME MORTGAGE
1. Use Your Home Equity for Your Kitchen Remodeling Project
Did you know that you can use your home equity to finance your kitchen remodel? You can do this through a home equity loan or a home equity line of credit. Let’s talk about the pros and cons of each.
Home Equity Loan
When you apply for a home equity loan, you can think of it as taking out a second mortgage. You can get a huge lump sum of cash by borrowing the equity in your home. The biggest advantage to using a home equity loan is that it comes with a lower interest rate compared to a personal loan. You need to make monthly payments, but you can rest assured that they won’t increase. This is a fantastic option if you need to fund a big kitchen renovation project.
Home Equity Line of Credit
This loan also entails borrowing from your home equity. However, instead of getting a lump sum of cash, you can borrow smaller amounts over a specified period. For this reason, it’s often considered the most cost-effective method of financing a kitchen remodel. The interest you pay is based on the amount of money you borrow. Just remember that to qualify for this loan, you must have good credit and enough equity in your home.
2. Consider Contractor Financing for Your Kitchen Remodeling Project
Homeowners who don’t want to go through the trouble of preparing piles of documents and waiting for long approval periods may choose contractor financing instead. Talk to multiple kitchen remodeling contractors and see whether they offer in-house financing packages. No matter how convenient this option is, take the time to do some comparison shopping. Choosing the first contractor you stumble upon doesn’t give you the opportunity to figure out how competitive their rates are.
3. Take Out a Personal Loan
Of course, there’s always the option of applying for a personal loan to finance your kitchen remodel. This can be the next best thing if you don’t have enough equity in your home. There’s also the advantage of it being an unsecured loan, which means you don’t have to worry about losing your house in case you fail to make payments.
Applying for a personal loan is a breeze, but be sure to study the interest rate carefully. Most come with a fixed interest rate, but others have a variable rate. Try to boost your credit score to bring down the interest rate, thus saving you more money in the long run. Do your research and look for lenders that offer personal loans specifically for home improvement projects.