Read the latest information about solar power and it seems like a no-brainer. You’ll be protecting the environment and you’ll save huge amounts of money on electricity. New systems even have battery backup that cuts you free from the utility companies entirely. Then you find out how much it costs. Yes, who wouldn’t love to save $20,000 or more over the next 20 years, but who has thousands of dollars to invest in solar right now? Even with the tax incentives that bring the total cost down, you still need the money up front.
Whether it’s solar, a new kitchen or a home remodel, there are ways to finance home improvements that are affordable. You can create your dream home and add to the value when you finance your upgrades with one of these methods.
Equity Financing
Once you have equity in your home you can borrow against that equity for home improvements. The equity is the difference between what you owe on the house and its current market value. Once you have value in your home, use that to apply for home equity lines of credit or home equity loans Cleveland Ohio, or wherever you live. Both methods give you cash against the excess value of your home, cash that can be used for home improvements or other projects. By investing in home improvements, you’re adding even more value to your property. Remember that these loans are secured with your property and failing to repay them could result in foreclosure.
Home Improvement Loans
A straight home improvement loan from the bank is another way to finance your upgrades. Unlike an equity loan, you aren’t securing this loan, which means the bank will charge you a significantly higher interest rate, because they are taking on more risk. Only use a home improvement loan if you need to make changes before you have equity in the property or don’t have a credit score to qualify for an equity loan. Don’t assume your own bank offers you the best deal. Shop around because interest on an unsecured loan can vary wildly, from single digits to nearly 40 percent APR.
Government Loans
The U.S. Department of Housing and Urban Development, or HUD, also provides home improvement loans through its Title I program. These loans are designed to help you fix up a house but you don’t have to have equity in the property or have a great credit score. In fact, there are no credit score requirements at all. You do have to have lived in the property for at least 90 days.
Small loans, under $7,500 are signature loans like a home improvement loan. Larger loans are capped at $25,000 for a single-family residence and use the home as collateral. Either way, you’ll get a low, locked-in interest rate. HUD loans can be used for solar but can’t be used for luxury items like new swimming pools.
Don’t give up on your dreams of solar power, or that new kitchen, just because you don’t have the cash in hand. Reasonable loans are out there, ready to help you make your dream a reality.
