A kitchen remodel can get pretty expensive. The process of earning the necessary money is tricky but doable with the right amount of dedication.
Below, we will address different methods you can use to fund that dream kitchen remodel. Your first step is to start with a solid budget.
Financing Method #1: Saving
Saving is the process of delayed satisfaction where you plan for a kitchen remodel in a few years. This is the slowest method of funding, as you’ll need to define how you plan on saving your money.
While it does take the longest, you don’t have to pay it back. Also, it is the safest method that has no interest rate.
Financing Method #2: Personal Loan
A personal loan involves you speaking to a bank, credit union, or other providers. The loan isn’t based on any collateral, meaning you are less likely to have your property repossessed.
The problem is that because you offer no collateral, the rates for personal loans are higher. If you can pay it off quickly, this might not be a bad idea.
Financing Method #3: A Home Equity Loan
A home equity loan is for owners who own their home and can put it up as collateral. The risk being if you miss your payment, your home is lawfully owned by the borrower.
Having collateral typically makes borrowing rates a bit better. So keep this in mind if you are a 100% owner of your home.
Financing Method #4: Credit Cards
Credit cards are handy for paying monthly bills and paying them down immediately. In a pinch, you can choose to finance your home project with credit cards.
However, credit cards typically have higher rates than home equity loans and HELOCs. So choosing to do so might have you pay more over time.
Financing Method #5: Home Equity Line of Credit (HELOC)
HELOCs are for those who still owe money to the mortgagee but have paid off enough to have some equity. By borrowing against the equity (the portion you own), you can basically re-owe part of your mortgage and get the money for projects.
Much like standard home equity loans, not paying these back will result in you losing your home. So avoid going over your budget to get a good kitchen.
What is the Best Method For Financing Your Kitchen Remodel?
Cash is the least risky while HELOCs and home equity loans are the fastest. So the answer to this question depends on what you can handle.
Never choose a financing method that will put your family at risk. Always run the numbers before choosing a financing method to be sure you can handle the payouts.
If you want to look at what a reasonable budget for your dream kitchen is, contact our team at Parada Kitchens and Bathrooms. Without a budget, you will have no idea how much you need to save or borrow, causing you to be wildly off in your estimates.