What's the best way to finance a home renovationHeaded to the Home Show to pick up some ideas for a home renovation project? First, get some insight about financing! You have several choices when it comes to funding a home renovation. Let’s first take a look at some common choices and the disadvantages that may not make them the best option. 1.) Home Equity Loan A home equity loan is a loan that’s secured by your home’s value. Home equity loans allow you to borrow a fixed amount of cash, which you receive in one lump sum. Cons:
- Upfront fees can be high.
- Receiving all the funds at once can push you into spending more than you need.
- The amount you borrow may not be enough.
- You may be stuck paying interest of 15% until you pay off the balance on your card.
- Your credit score may be negatively affected by the large, unpaid balance on your card.
- Upfront costs and interest rates can be high.
- Receiving the entire amount in one lump sum can lead to overspending.
- Retail credit cards can have very high interest rates.
- With so much credit extended to you, you may be tempted to overspend.
- Merchant loans have high interest rates.
- You’ll need to pay a fixed percentage of your sales toward the loan repayment. If your sales spike, this puts you at a disadvantage.
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