You might think that a mortgage company is going to push a home loan for every little home improvement project you may want to do. But here's the thing about doing that: not everyone needs to finance home improvements. It's a shocking truth some lenders don't want you to know. But it's the truth. Not everyone needs to borrow money for home improvement financing, just like not everyone should buy a house.
Sometimes renting is better for some folks, just like some folks can perform do-it-yourself upgrades with no financing.
Responsible banks don't throw money at every homeowner or buyer just to have more deals. Instead, the lender and the buyer should look at the situation and decide whether the financing is needed and will result in a good long term relationship. Foreclosures and defaults are bad for everyone. So, how do you as a homeowner decide whether home improvement financing is right for you or whether you should do the work yourself? Let's run down some common home improvement projects and see what works under each umbrella.
First, let's consider what home improvement financing entails. One of the most common and versatile home improvement loans is the FHA 203k. As a homeowner, you can refinance your mortgage to pay for remodeling. The 203k allows you to roll the cost of repairs and renovations into the same loan as the home value. The total renovation mortgage is based on the after-improved value of the home once the upgrades are completed. That differs from a home equity loan that's based on the current equity (before the home improvements).
Take a look at the table below. Decide if the cost is something you can afford with your cash-on-hand, and whether you have the time and skills to perform the work. If you can answer yes to those questions, then you don't need home improvement financing. If the answer is no, or you want to have all of this work done, then DIY is probably out of the question.
|Project||Have money to cover the cost?||Can you do the work yourself?|
|Design and build a deck|
|Roof & shingle repair|
|Install a slider door|
|Re-paint interior rooms|
If you have the money, the time and the skill to perform the work yourself, then DIY is the way to go. It's satisfying to look at your home and say, "I built that." But if your money is lacking, or the projects are too big and too expensive, then home improvement financing is at least an option you may consider.
If you're ready to research a bit more, download "The Complete Guide to Spring Home Improvement Financing" at the button below. This free eBook walks through the process of DIY and financing, so you can figure out what works best for you.
(deck photo: Flickr user US Dept of Agriculture)