How Does Home Improvement Financing Work?
Have you wanted to finish your basement for a long time? Do you need a safe place for the kids to play when it snows outside? Or do you want to make a home office, guest room or home gym there? Regardless of what you want to use it for, a finished basement will solve many of your problems. However, you have asked for estimates from a few contractors and it is just beyond your budget.
This is where home improvement financing can help. You can apply for a home improvement financing loan from your bank usually as a home equity loan or a personal loan. Shop around for the lowest interest rates so that you do not have to pay too much over the principal.
Or one can take advantage of home improvement financing when they apply for a credit card. This could be a new promotional credit card with 0 % APR (interest) on purchases or it could be a credit card from a home improvement store lie Lowes or Home Depot.
The advantage of the credit card from Visa, MasterCard or any other such issuer is that you can use the credit line to pay the contractor or for any furniture or any other thing you need for your home improvement projects. However, the advantage of getting home improvement financing from Home Depot and the like is you get special promotions such as 10% off your entire purchase the day you apply and other such marketing promotions so that your dollar stretches further. They often give your 12 months no interest payments or 12 months no payments if you buy things on their store card.
Borrower Beware
However, as with any other loan or credit card, be very careful of the repayment terms and interest rates. For instance if your buy a $2000 refrigerator and the financing terms you get state that you have 0% interest for 12 months, make sure you pay it off in full before the 12 months are up. This is because in case you do not, interest will be charged from the day you purchased it and that will be a big blow in your home improvement financing plans.
Home improvement financing is a great idea to add value to your home. However, you have to know what you are signing up for. Whether it is a credit card from a bank, a personal loan or a store card, make sure you pay it off within the time specified. If you feel you will not be able to make the payments, then hold off on the home improvement plans until you can.
