Renovating? Consider These Financing Options
For many people, their home is the biggest investment they’ll ever make in their life. It’s the place they will spend the most money on and the most time in. It stands to reason that they will regularly want to make improvements and adjustments as their family grows or as their tastes and lifestyles change.
Improvements can also increase the value of a property. If the owner is looking to sell their home, they would do well to make it as attractive to buyers as possible. A home is also subject to regular wear and tear. It will require seasonal upkeep and tune-ups. Not all work-ups are anticipated. There will also be emergency repairs and replacements that may not have been included in the budget for home expenses.
All of this will cost money that some people may not have readily available. While purely cosmetic and aesthetic renovations can wait until the homeowner can put away enough money, some repairs cannot. Putting off necessary tune-ups for a property can worsen the damage and make repairing it even more expensive. Good news for homeowners, there are many home improvement financing options available.
Home Improvement Financing Options
Home Equity Loan
A home equity loan is basically taking out a second mortgage. Your home is used as collateral for the house renovation loan. This is the preferred financing route for major renovation projects that require a considerable amount of money. This is usually a long-term loan—around 10 to 15 years to pay off—with fixed interest rates.
The biggest disadvantage of a home equity loan is that you may end up losing your home if you default on your payments.
Home Improvement Loan
If a homeowner doesn’t want to use their home as collateral, they can get a home improvement loan instead. Because this is basically a cash loan that uses no collateral, it’s also called an unsecured loan. This is a lot less risky for the borrower but the trade-off is a smaller maximum loan amount, higher interest rates, and a shorter payback period.
Contractors with Customer Financing Options
If you’re a homeowner in need or want of repairs and renovation for your property and if you want to minimize the risk for yourself, consider looking for contractors that offer customer financing options and lines of credit.
Aside from checking out previous projects, part of doing your due diligence when looking for a contractor to work on repairs and renovations for your home is asking if they accept credit card payments and offer customer financing. It’s always a better option to go for a contractor that can accept credit card payments.
Credit card transactions offer an added layer of protection between the contractor and the homeowner and vice versa. For contractors, they don’t have to worry about chasing down monies owed or getting paid with potentially bad checks. For homeowners, if they have issues about the services rendered, they can file a dispute claim with their credit card company and have the charges reversed.
In addition, when you go for a contractor that can offer flexible financing options, you may no longer need to take out a home renovation loan.
Home Improvement Financing for Contractors
The home improvement industry is thriving and very competitive. For contractors to stand-out, they should have something more to offer potential clients aside from impeccable service.
Payment Pilot helps contractors close more deals and get more business and we do this by equipping them to offer diverse, convenient, and secure payment options to their customers. We find that it’s also easier for contractors to upsell their services and to earn more if they can make their payment terms fair, flexible, and convenient to their clients.
If you are a contractor interested in taking your business to the next level, or if you’re a homeowner weighing your home improvement financing options, reach out to us for a free consultation.
