Improving the appearance and durability of your kitchen can significantly increase the value of your home. An updated kitchen is one of the first things buyers look for when purchasing a house, but even if you do not plan on selling your home in the near future, you may still want a new kitchen. Kitchens are often picked as the room homeowners are least satisfied with. While many homeowners are worried about how to pay for a new kitchen, there are many options.
Mortgage refinancing can be a fast and easy way secure money for any type of home improvement project. A home owner can refinance their current mortgage for a higher amount if they have equity built into their house, and keep the difference in amounts. A lender may approve the loan based on the worth of the house once the improvements are made, rather than the current value.
A home equity loan, or home equity line of credit is an option that many homeowners choose for a project like a kitchen renovation. This loan is secured against the value of your home, and usually has a lower interest rate than an unsecured loan, but may have a higher interest rate than your original mortgage. The good part about one of these loans is that it usually is given to you at one time, rather than small amounts as the project progresses. The home equity line of credit works in a similar way, but allows you to withdraw money in small increments through a bank card or checking account.
More homeowners who plan a smaller kitchen remodel, or plan to complete the work in smaller stages, choose a personal loan or personal line of credit. The downside of this type of payment is that it isn’t tax deductible like other options may be, but it isn’t secured against your house. This can also make the interest rates significantly higher, especially if you have a poor credit score. Despite that, a personal line of credit is a great choice for homeowners doing small projects.
If a loan is not an option for your kitchen remodel and you can wait a few years, there are other options. For instance you can set up a savings account, and deposit 10% of your paycheck directly into the account; the money can accumulate quite quickly, even if you choose only 5% of your paychecks. Or you may consider taking a second job, and use that money to save for your kitchen remodel. And of course if you have any experience in remodeling, you can save money by doing some of the work yourself.
Paying for a kitchen remodel doesn’t have to be impossible, but you do need to decide what option is the best for your life and financial situation.