When it comes to financing a kitchen or bathroom remodel, there are a variety of options available to homeowners. One important aspect of the remodel to consider is the cost of countertops. Countertops can be a significant expense, costing anywhere between $1,000-10,000 for a bathroom or kitchen renovation, and many homeowners may be wondering how to finance this part of the project.
A whole bathroom or kitchen remodel can be many thousands on top of this cost. A full bathroom remodel is typically 3-8% of the total value of the property. A full kitchen remodel can run between 5-15% of the total value of a property. In the South Puget Sound area, the average home value runs around $490,000. That means the average homeowner in our region often spend upwards of $50,000 to remodel their entire kitchen.
Home Equity Loans and Lines of Credit (HELOC)
One option for financing a kitchen or bathroom remodel is to use a home equity loan (HELOC) or line of credit. This type of loan allows homeowners to borrow against the equity in their home, which can be a great way to finance a remodel project. This typically increases your monthly mortgage payment amount, so be sure to understand the terms which you are agreeing to.
- Pros:
- Lower interest rates compared to credit cards.
- Fixed monthly payments.
- Interest may be tax-deductible.
- Cons:
- Increases your monthly mortgage payment.
- Risk of losing your home if you default on payments.
Personal Loans
Homeowners can also consider a personal loan, which can be used for any purpose, including home improvement projects.
- Pros:
- Flexibility in use.
- No collateral required.
- Fixed interest rates.
- Cons:
- Interest rates may be higher than HELOCs.
- Shorter repayment terms.
Credit Cards with Low Interest Rates
Another option for financing a remodel is to use a credit card with a low interest rate. This can be a good choice for homeowners who plan to pay off the balance within a short period of time and has been a popular strategy for house flippers for the past few decades. However, it’s important to note that credit cards often have higher interest rates than other types of loans, so homeowners should be sure to read the terms and conditions carefully.
- Pros:
- Quick access to funds.
- No collateral needed.
- Ideal for paying off the balance within a short period.
- Cons:
- Higher interest rates compared to other loans.
- Read terms and conditions carefully.
Cash-Out Refinancing
One of the most popular option for long-term homeowners is a cash-out refinance to finance remodel projects. With a cash-out refinancing, homeowners can borrow against the equity in their home and use the proceeds for any purpose, including home improvement projects. If you have lived in the same house for more than 5 years this is generally a good option to explore with your lenders. You probably have a signicant amount of cash locked up in the property that could be utilized.
- Pros:
- Long-term financing.
- Potential for lower interest rates.
- Suitable for long-term homeowners.
- Cons:
- Extends the mortgage term.
- Closing costs involved.
Local Lenders and Partnerships
- Consider local banks specializing in home improvement lending. There are many local Puget Sound area banks which specialize in this kind of lending including Academy Mortgage, Oly Fed, and Timberland Bank.
- Additionally, Tops Countertops is proud to partner with Wells Fargo for project financing. You can apply at this financing application link on our website.
In conclusion, there are many options available to finance a kitchen or bathroom remodel, including using a home equity loan or line of credit, a personal loan, a credit card with a low interest rate, or a cash-out refinance.
And don’t forget to consider Tops Solid Surface for your countertops. We typically ask for a 50% deposit followed by 50% after the installation is completed and have worked with many lenders and remodelers who are looking to finance their project. For established, vetted contractors we also offer a contractor discount and NET 30 terms.
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