Do you plan home upgrades? Here’s how to budget for it

Home Upgrades are usually quite expensive, as well as time-consuming, and complicated. There are almost always additional expenses, and renovations often don’t adhere to the chosen course. For example, you may plan to change only tyles in your bathroom, but in the process, discover that plumbing needs changing as well.

Staying at home during the Covid-19 pandemic has changed many things, among them the way homeowners renovate. Some of these changes are quite unconventional. For example, you would think that when restricted in one place for so long, people would want more privacy and desire to add more walls. It’s a logical assumption, considering that for large families, it may be inconvenient when everyone is working and studying in a large sitting room. However, that’s not the case.

According to interior designer Max Humphrey, rumors of the open floor plan’s death are exaggerated. He noted that middle America still loves their open floor plans. While designers talk about how open floor plans are over, in reality, they’re not.

However, since the pandemic, homeowners have been creating spaces they’d want to visit if they didn’t live there. Their favorite outdoor bar is now their patio, while home kitchens have replaced restaurants.

According to NerdWallet’s 2020 Home Improvement Report, many homeowners paid for their upgrades with their savings last year. That’s a wise choice, considering that cash is the cheapest way to cover home renovations if the coronavirus pandemic’s economic impact hasn’t hit your own finances.

Still, if you don’t have ready cash but are itching to make the space where you are spending almost all of your time more lavish, here are some affordable financing options, such as cash-out refinancing or personal loans.

What are 2021’s trends, and how can you finance them?

Let’s begin with whole house renovations. According to Interior designer Stephanie Sullivan, her clients are renovating the things in their homes they wanted to change when they bought the house. However, they stayed busy enough over the years to ignore. Now they are locked in their homes, and they don’t want to wait anymore. Still, fully remodeling most or all of the rooms in your house is, in most cases, an expensive endeavor.

If your project is $50,000 or more, you should try a cash-out refinance. That involves replacing your existing mortgage with a larger one. You can use the extra money to renovate.

However, cash-out refinance is a good option only if you get a low-interest rate and if you have enough home equity to match the project cost.

On the other hand, if you plan room conversions only, it will be less expensive. People are redoing their kitchens as places to connect with family and changing their bathrooms into spas. But if you want only one- or two-room renovations, for such midsized projects refinancing your mortgage may not be worth the time and effort.

In that case, a personal loan of around $20,000 could be a better choice. You can qualify for such loans based on your creditworthiness and finances, and they don’t use your home as collateral.

If you want to get a fresh look in your home on a budget, there are also DIY projects, which are much more affordable.

According to Humphrey, replacing light fixtures can make a big difference. You could also add a roll of stick-on wallpaper or a fresh coat of paint. Even new lightbulbs, towels, and bed sheets can change the look of a room.

Furthermore, you can such small projects on your own. If the cost of your project is below $10,000, then you should consider a zero-interest credit. If you can pay the balance during the card’s promotional period, which often consists of 12 to 18 months, you’ll finish your project interest-free.