Carving Out a Plan: Creative Ways to Cover Your Interior Design Cost
Dreaming of a rustic wooden look for your home? Get all your financial ducks in a row with these creative strategies for paying your interior design cost.
You did it! You created the perfect interior design plan to revamp your home into the home of your dreams. Complete with hot tub and wine cellar.
Now you have to figure out how to pay for it.
If you don’t have a big bundle of cash saved up, don’t worry. You’re not alone. In fact, 35% of American adults have less than $1,000 in their savings accounts.
So how will you afford to do a spendy remodel on your home? You must get creative! That’s where we’re here to help.
In this article, we’ll go over some traditional and some creative ways to pay for your interior design cost.
Home Equity Loans
Why not use the equity in your home?
There are two types of home equity loans that you should pay attention to. Both types are secured by a mortgage on your home.
If you already have a mortgage, the home equity loan is secured by a second mortgage.
A term loan is a mortgage on your home that has a specified repayment term. This means that you’ll make a set monthly payment through the term of the loan.
How much money can you get? That depends on two factors: How much equity you have and how much money you make.
Banks look at something called loan to value (LTV) when they review a loan application. For example, if your home is worth $100,000 and you have a mortgage for $80,000, then your LTV Is 80%. How high the bank is willing to lend depends on the bank.
Also, your term loan amount depends on how much you can afford. A bank will want to verify your income and see that you can support another loan payment.
Line of Credit
A Home Equity Line of Credit (HELOC) is a more common way to finance home remodels. Unlike a term loan, this loan doesn’t have a set monthly payment. Instead, you pay interest on the loan balance every month.
This means your monthly payment is less than a term payment. But it also means that you won’t pay the loan off if you make interest payments only. This is the drawback of the HELOC.
LTV still applies with a HELOC. The bank might order an appraisal to verify your home value. This costs a few hundred dollars and takes several weeks to complete.
Your home is not the only thing to use as collateral. There are several types of personal loans available at the bank.
If you own a car free and clean, you could use that equity to take out a term loan secured by the car. Campers, boats, and ATVs work the same way.
You can use your retirement accounts as collateral too.
If you have a solid income and good personal credit, you may be able to get an unsecured loan from a bank. This means you don’t have to pledge any collateral. But the criteria to qualify are strict.
People who don’t have good credit opt for payday loans online. A payday loan is a way to get a quick, short-term loan. The drawback is that they often have higher interest rates.
0% Financing on Introductory Credit Card Offers
Lots of credit cards offer 0% introductory finance rates. As long as you have reasonable credit, you might apply for something like this.
Many of the big home improvement stores offer their own credit cards. Check with yours to see if you can get one with a great introductory offer.
But remember, 0% never lasts. And rates usually skyrocket after the introductory period. You need a plan to pay off the credit card within the low-interest timeframe.
Refinance Your Mortgage for Cash Out
Another way to tap into the equity of your home is to refinance your first mortgage. This process often takes longer.
And there are more fees than with a home equity loan.
But a refinance might save you money in the long run if you get a better interest rate. And many mortgage lenders offer a cash-out refinance so you can use the extra money to pay for your remodel.
Create Your Own Side Hustle
Instead of trying to borrow the money, create it. There are lots of great opportunities and making money online might be your best option.
Do some research and delve into a side business. You can bring in several hundred extra dollars per month this way.
Then you’ll have enough money saved within just a few months.
Make a Plan and Save Up
Yes, it’s not the fastest way to finance costs, but it is the smartest way to do it. If you don’t care to go into debt for your remodel, start saving.
You’d be amazed at how much money you’ll save by cutting out a few things here and there. Dining out, movie tickets and bar tabs are some of the worst offenders.
Create a monthly budget that limits your extra spending on these items.
Try canceling your expensive cable subscription for a Netflix subscription instead. If you have a high car payment, trade it in for something cheaper. You’ll find that you can save the money much faster than you expected.
Cover Your Interior Design Cost Your Way
The best way to cover your interior design cost depends on you. Consider your options and pick what works best for your situation.
Home equity loans are the most traditional way to finance home improvements. But you can use the equity in your home by refinancing your mortgage.
You might also consider a personal loan or an unsecured loan.
Signing up for a 0% introductory rate credit card is a good idea as long as you have a plan to pay it off. Or you can start a side hustle to increase your income.
And plain, old-fashioned saving money is always an option.
Looking for renovation ideas? Woodz has you covered! We love everything involving wood, craft, and nature.