Ways to Pay for a Basement Remodel
Thinking about remodeling your basement can be daunting. There are so many decisions that go into a remodel: DIY or contractor, linoleum or hardwoods, extra walls or open concept? But when it comes to your next basement remodel project, don’t let finances stand in your way. A basement remodel is an investment that will add value and usable space to your home. This may mean a few upgrades or a complete overall depending on time, energy, and budget, but the project will be well worth the work. Whether you choose to save intentionally and pay out of pocket, charge your credit cards, or apply for a loan, there are several viable methods for paying for your next project without too much headache or stress.
FHA 203K Loan
This loan program through the Federal Housing Administration allows homeowners to remodel their primary residence to build equity without a second mortgage or Home Equity Line of Credit. Instead of multiple payments with different rates of interest, this loan enables homeowners to include remodel loan payments with their monthly mortgage payment at a normal FHA 30 year fixed rate. This loan can be used for small projects like new windows or upgraded linoleum, or massive basement overhauls.
Use Your Home Equity Line of Credit (HELOC)
Your home equity line of credit increases with each monthly mortgage payment. Depending on how much money you’ve put down on your home, you may have a substantial amount to borrow against to use to pay for your basement remodel. This loan essentially works as a credit card, allowing the homeowner to use the money as needed and your monthly payment will vary depending on how much of that credit you have used.
Credit Cards
Did you know you can use your credit cards to pay for a basement remodel (depending on your credit card limit, of course). Using credit cards can be convenient especially for DIY projects and supply purchases. Some contractors accept major credit cards, so be sure to ask upfront if this is an acceptable for of payment. Credit cards mean a project can be started immediately without the hassle of applying for loans, but be careful to pay off balances quickly to avoid decreased credit card scores and increased interest rates.
HomeStyle Renovation Loan
This loan is specifically for home buyers or anyone refinancing a home living in Colorado. This home covers repair, remodel, renovation, or energy improvement projects necessary for your newly purchased or refinanced home.
