Doing some home renovations this summer and not sure how to finance this expense? With so many loan options it may be hard to decide which one makes the most sense. Read on to learn more about the pros and cons of some common choices.
1. Home Equity Loan
A home equity loan is a loan that’s secured by your home’s value. Home equity loans allow you to borrow a fixed amount of cash, which you receive in one lump sum.
Cons:
- Upfront fees can be high at some financial institutions, but are very reasonable at Azura - ask for an estimate today!
- Receiving all the funds at once can push you into spending more than you need.
- The amount you borrow may not be enough.
2. Home Equity Line of Credit (HELOC)
This is an open credit line secured by your home’s value. HELOCs can help you stick with your budget since you can withdraw money from your line of credit as needed, instead of all at once. If you're wanting to take take advantage of the equity in your home but don't want to be saddled with a loan, you could consider starting the HELOC application process online with Azura.
Cons:
- Rising interest rates can increase your payment.
- Without discipline, you might overspend and find yourself with large principal and interest payments during the repayment period.
3. Credit cards
Credit cards can work for minor touch-ups, but funding bigger projects this way can have some negative effects.
Cons:
- You may be stuck paying interest of 15% until you pay off the balance on your card. Fortunately, Azura offers some fantastic great rate credit cards - Learn about our options now.
- Your credit score may be negatively affected by the large, unpaid balance on your card.
4. Personal loans
These short-term loans may or may not be secured by a form of collateral.
Cons:
- Upfront costs and interest rates can be higher than other options.
- Receiving the entire amount in one lump sum can lead to overspending.
5. Retail credit cards
Some retailers encourage customers to finance home renovations on a store credit card.
Cons:
- Retail credit cards can have very high interest rates.
- With so much credit extended to you, you may be tempted to overspend.
Every homeowner's situation is different, so as with any financial tool, it's important to consider all the pros and cons of your options for financing your next home renovation.
If you're not sure where to start and want to talk with someone about what options would work best for you, contact our Azura Home Loans Team by calling (785)233-5556 or request an appointment online today.
As an Equal Opportunity Lender, We Do Business in Accordance With Federal Fair Lending Laws. Federally insured by NCUA.
