5 Alternatives to Putting a Big Home Expense on Your Credit Card

5 Alternatives to Putting a Big Home Expense on Your Credit Card

Business

Repairing or renovating your home can be an exciting project, but it can get expensive if you’re relying on just a credit card. A large credit card balance may accumulate interest quickly, making it harder to pay off over time. However, there are many other financing options to choose from, including mortgage refinancing and home improvement loans. Here are a few options to consider when you’re looking to fund a home improvement project:

5 Alternatives to Putting a Big Home Expense on Your Credit Card

Refinance your mortgage

If you have equity in your home, you may be able to refinance your mortgage and use the extra cash to pay for home improvements. A cash-out refinance lets you take out a new mortgage that is larger than your current mortgage balance. The loan pays off your existing home loan and leaves you with a chunk of money. You can use this lump sum of cash for home improvements.

Get a home improvement loan

A home improvement loan can cover home renovation expenses. Home improvement loans are a type of personal loan, so your credit score and other financial information will influence your interest rate, the amount you qualify for, and other terms. Personal loans also typically offer fixed interest rates and fixed payments, while credit card interest rates are typically variable. Just be sure to shop around for the best rate.

Borrow against a life insurance policy

Another way to pay for home improvement projects is to borrow against the cash value of a permanent life insurance policy like whole life insurance or universal life insurance. You can borrow against the cash value of a permanent life insurance policy for any reason, including home improvements. Just remember that borrowing against the cash value will reduce the death benefit of the policy until you’ve repaid the loan.

Government grants

If you are making energy-efficient improvements to your home, you may be eligible for government grants or rebates that can help offset the cost of the improvements. You can visit your local government website to see what programs are available in your area. Check your local Housing and Urban Development (HUD) office or reach out to the National Residential Improvement Association (NRIA) for more information about home repair grants.

Use savings

If you have savings, you may want to consider using some of that money to pay for home improvements. This can help you avoid taking on debt and save money on interest charges. You may not want to use up an emergency fund, but it may be worth it to redirect any funds saved up for a vacation or other non-essential purchase.

If you don’t have the cash on hand to pay for a big home expense, you may be able to save up over time. Create a home improvement fund by setting aside any monthly savings in a dedicated savings account.

The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value will reduce the death benefit and may affect other aspects of the policy.

Source: iQuanti