home remodel

Should You Use a Personal Loan or a Home Equity Loan to Remodel Your Home?

Holly Johnson — Fri, 09 Oct 2020 17:32:44 +0000

The costs of remodeling your home can add up quickly, and they can even be exorbitant, depending on the project you take on. According to Remodeling Magazine's 2019 Cost vs. Value study, a minor kitchen remodel would set you back $22,507 this year, replacing a roof with asphalt shingles costs an average of $22,636, and homeowners paid $47,427 on average for a mid-range bathroom addition.

The fact that remodeling can be so pricey means not everyone has the cash to pay in full. In many cases, homeowners have to borrow the money they need for a project, and most of the time they use a personal loan or a home equity loan. Here's how to decide which option is best for your own remodeling project.

Pros of home equity loans

When you own a home, it's easy to automatically assume a home equity loan would serve your needs best — and you could be right. Home equity loans let you borrow against the value in your home and use it as collateral.

Low and fixed interest rates

These secured loans tend to come with low interest rates and fair terms. Most home equity loans last for 10 to 30 years, making it easy to tailor your loan to your needs and monthly budget. Home equity loans also come with fixed interest rates, fixed monthly payments, and fixed repayment timelines, so they're easy to plan for.

Easy application process

You can also compare and apply for home equity loans online and from the comfort of your home, although you may need an appraisal and other steps completed before you can move forward.

Tax benefits

As a final upside, you may be able to write off the interest you pay on your home equity loan, provided you itemize. While you can't deduct home equity interest if you use your home equity loan proceeds for personal expenses, the interest is still deductible if you use your loan proceeds to "buy, build, or substantially improve" your home, notes the IRS. (See also: Home Equity Loan or Heloc: Which is Right For You?)

Cons

There aren't a lot of downsides when it comes to home equity loans, but there are a few issues to be aware of.

You might not qualify

Depending on how much equity you have in your home, you may not even qualify for this type of loan. According to the Federal Trade Commission (FTC), you can typically only borrow up to 85 percent of your home's value across a first mortgage and home equity loan. This means that, if your home is worth $200,000, you could only borrow up to $170,000 across a first mortgage and home equity loan.

The possibility of foreclosure

Second, the fact that you're putting your home up as collateral means you could lose your property to foreclosure if you stop paying your home equity loan bills.

Pros of personal loans

Personal loans are popular for home remodels for a few reasons.

Fixed payments and interest rates

Like home equity loans, they come with fixed monthly payments and a fixed interest rate that will never change.

Your home is not collateral

Since personal loans don't require you to put up your home as collateral, the amount you can borrow isn't tied to your home equity. For that reason, they can be a good option if you don't have a ton of equity in your home but still need to borrow money.

Less red tape

A final reason to consider a personal loan is that there aren't quite as many hoops to jump through when you apply. You don't have to prove the value of your home, for example, and there's typically a lot less paperwork involved.

Cons

While personal loans might be easier to manage and apply for, there are still a couple major downsides.

You can't deduct the interest

One issue with using a personal loan for a home remodeling project is that you cannot deduct the interest on your loan on your taxes no matter what.

Higher interest rates

Personal loans may come with slightly higher interest rates than home equity loans since these loans are unsecured.

Which option is right for you?

At the end of the day, home equity loans and personal loans can both work well for your home remodeling project. They both have fixed interest rates and fixed monthly payments you can easily plan for, and either option could let you borrow enough money to bring your remodeling project to fruition.

Still, there are plenty of factors to consider before you decide. For example:

How much equity do you have in your home?
Do you want to put your home up as collateral?
How much do you need to borrow?

Also, make sure you consider any fees involved in both home equity loans and personal loans. Many lenders offer products that come with no origination fees, application fees, or hidden fees, but those typically only go to consumers with good or excellent credit. (See also: 5 Personal Loan Fees You Should Never, Ever Pay)

Fortunately, it's easy to compare home equity loan and personal loan terms online. Some websites like LendingTree even let you compare multiple loan options in one place.

No matter what you do, take the time to compare all your loan options in terms of their fees, interest rates, and repayment timelines, along with the monthly payment you'll need to commit to. With enough research, you could have your big project up and running in no time.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Affordable Home Remodel Tips for Pet Owners

Andrea Cannon — Thu, 22 Jun 2017 08:30:11 +0000

A pet can bring unbridled joy and unconditional love to your life. However, they can also leave stray hair, furniture damage, and other messes behind. Here's how you can keep your home beautiful even when you have a four-legged fur-baby shedding all over everything. (See also: 5 Pet Costs You Don't See Coming)

1. Opt for hard flooring

Install floors that can stand up to scratches and dirt. Hard flooring like vinyl, laminate, hardwood, and tile offer easy maintenance and pet cleanup, along with a great value over time. Ceramic tile is also great because it's particularly resistant to animal stains.

2. Choose the right carpet

Carpeting can be very difficult to clean, particularly with accidents and excessive hair. It can also harbor stains and make your pet allergies worse.

If you do decide on carpeting, look for a synthetic blend option with low pile that won’t absorb as much hair and is easier to vacuum. Also consider modular carpet tile or inexpensive rugs that can be easily picked up and cleaned or replaced.

3. Select washable fabrics and concealing patterns

Choose washable fabrics for cushion and pillow cases whenever possible so you can easily throw them in the washing machine. Fabrics with patterns can help camouflage old stains. Avoid tweed fabrics that can trap hair between the fibers.

Look for items in colors that match your pet's fur. For instance, you wouldn't want to purchase a black couch if you have a white cat; the stray pet hair would be abundantly obvious.

4. Use semi-gloss wall paint

Flat finish paint is nearly impossible to clean. Semi-gloss paint in satin or eggshell finishes is easy to wipe down, making it more pet-friendly.

5. Set up a pet station

Convert an area by the door into a pet station. This will be for hanging leashes, walking shoes, towels, doggy bags, and anything else you need to get your pet out the door quickly. This will also come in handy on a rainy or snowy day when you need to wipe your pet off before they run around the house with wet or dirty paws.

6. Hide the litter box

Hidden litter boxes look like an ordinary nightstand or planter on the outside, but have the litter box housed inside. Keep the litter box in a private area, away from feeding areas, so your pet can feel safe and comfortable.

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This article is from Andrea Cannon of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Great Alternatives to Remodeling Your Home

Linsey Knerl — Mon, 14 May 2012 10:24:16 +0000

If your home feels a little “blah,” but a new kitchen or bath is not in the budget, try some of these less-involved solutions. They are all designed to freshen up your look or make your living space more usable. Plus, they cost less than a major remodel and are considerably less stressful as well! (See also: 15 Home Decorating Ideas for Under $5)

1. Try New Trim

One way to add a little “oomph” to a room or hallway is to hire a good trim carpenter to install a high-quality trim or crown molding. Douglas Breaker, CEO of HomeFinder.com, swears by this small update that can really dress up a house. Since it comes in a variety of looks, you’ll likely find the perfect option for your age and size of home.

2. Dress Up Doors

Douglas also vouches for the value of new exterior doors (both aesthetically and in regards to property worth). “Exterior replacement projects, such as a new garage door and a new entry door, offer some of the best returns at resale,” he advises. Most homeowners can recoup 70% or more of the cost of the project at resale, and even if you don’t plan on selling, it can create a stunning transformation for your home’s exterior.

3. Move Your Furniture

Instead of buying all new furnishings, consider maximizing space with the items you already have. Lauri Ward of Redecorate.com suggests creating a “u-shape” with your furnishings, instead of an “L-shape,” to create a more comfortable conversation area. Other tips include making sure your furniture isn’t blocking traffic patterns and avoiding having all your furniture against the walls (something people commonly do when trying to “open” a room up). Both mistakes can make rooms appear clunky or smaller than they really are.

4. Declutter Walls

Lauri also recommends that one wall in every room be left clear of artwork so that the eyes have a place to rest. You may also want to move artwork three inches lower than where it already hangs as well. “Everyone hangs art too high!” she claims.

5. Update Cabinets

Cupboards and cabinetry take up a large amount of kitchen wall space, so it’s important to do it right. Susan Serra, blogger at The Kitchen Designer, reminds us that cabinet hardware is the “jewelry” of the kitchen, and she recommends replacing old knobs and handles with something stylish. She also advises home owners to remove one or two wall cabinets and replace them with open shelving; this can create a more spacious look for any size kitchen. Her best tip? ”For paintable/older cabinets, paint a few featured cabinets a different color (equal size wall cabinets on each side of the sink, for example).”

6. Redo Lighting

Finally, there are several simple solutions to help correct and enhance the lighting in any room. The experts I spoke with came up with two that can be done right away, and both are more budget-friendly than a full room redo. Lauri Ward recommends pairs of lamps — never just one — for better illumination. She also explains that lighting directed downward and not at the ceiling can help your room avoid “tiring and unattractive shadows.” All of our experts liked the look of LED lighting under cabinets; this appearance can be achieved with DIY products that have the wiring done for you.

While a full remodel will cost $10,00–$65,000, it isn’t something that’s feasible for many cash-strapped homeowners. By starting with even just one remodeling alternative from this list, you can give your home new life — for a fraction of the cost.

What have you done to perk up your home’s look?

This article is from Linsey Knerl of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Ways to Remodel Your Bedroom (Without Demolishing a Thing)

Andrea Karim — Tue, 10 Jan 2012 11:00:27 +0000

You spend roughly 1/3 of your life sleeping, so shouldn’t you sleep in a room that contributes to sweet dreams? An uninspired or disorganized bedroom can make it tough to relax, and it probably doesn’t help your disposition in the morning, either. What if your bedroom is a focal point for family time — maybe you read in bed, snuggle with the kiddos, or spend quality time with your pets while ensconced in the bedroom. A dingy or depressing bedroom won't contribute to relaxing gatherings.

Fortunately, bedroom remodels are some of the most affordable projects for a make-over (unlike, say, changing up a bathroom or kitchen). You don't have to install new windows or remove any structural objects; often, all that's needed is a deep clean and a little surface work. (See also: 15 Home Decorating Ideas for Under $5)

First Things First

Ready for a bedroom re-do? First, before you get started, do a little soul searching and consider the following.

What Do You Need?

What needs to change to make you happy? Is the room too dark? Does street noise keep you awake? Can you fix everything with a simple furniture rearrange?

What’s Your Style?

What kind of room do you really want — a bright, airy bedroom, or a dark, cozy den of slumber? Pick a style and stick with it to avoid getting derailed.

What Are Your Personal Limits?

Do you love stark, white bed linens but have three black cats that sleep with you every night? Choose bedroom components that work with your lifestyle and habits.

What’s the Use?

Do you do more than sleep in your bedroom? Is it also your office? Your movie theater? If there’s no way to keep the bedroom reserved for sleep alone, then you need to take its other uses into account.

Have you meditated on your own nature and what kind of bedroom you are seeking? Excellent, let’s get down to the nitty-gritty with these simple bedroom remodeling ideas.

1. Organize and Purge

Like with most home make-over projects, a good portion of the actual make-over involves simply getting rid of unneeded stuff that is cluttering up the environment. Sure, you like to read before bed, but do you need a whole stack of books on the bedside table? Put the unread tomes back on the bookshelf or donate them to the library (you read everything on your Kindle now, anyway).

Because your closet is in your bedroom, this is a good time to go through it and get rid of unused clothing, coats, and shoes. If you have a linen closet that needs organizing, consider paring down your excess towels and mismatched sheets.

2. Make Walls That Soothe

Painting a bedroom is probably the fastest and cheapest way to change the overall character. Choose a color that works with your trim (this is where paint chips come in handy). Strive to find a color that enhances the exact ambiance that you want in your bedroom — cozy and warm, light and modern, or bright and eclectic — there are thousands upon thousands of colors to choose from. And remember, if the first color doesn’t work, you can always paint over it.

3. Consider Window Coverings

You may think that it’s the rug that really pulls the room together, but window dressings are more important in the bedroom. Because bedrooms tend to be smaller and dominated by large furniture, the eye is drawn upward beyond the bed — that’s where the window dressing can work its magic. Curtains, blinds, and shades can be very expensive, so first decide what kind of coverage you need, and then go from there. White panel curtains are simple, cheap, match with almost any style. If you need curtains that block the early morning light but don’t appear heavy, consider thick cotton or velvet in light colors.

4. Hang Art That You Love

The bedroom is a great place to display the works of art that mean the most to you. Whether it's paintings or silk rugs, sculptures or kid's drawings, make the most of whatever wall space you have. If you prefer a clean, uncluttered look, choose one or two pieces that you like the most. If your taste runs toward the more eclectic, you can fill up your walls with whatever you want. Framing art can be expensive, so look into cheaper art displays for your favorite works.

5. Pick Appropriate Linens

Hey, this IS the bedroom, right? Sleeping is the name of the game, is it not? Your linens should be comfortable first and foremost, with style coming in second. Unless you are the type of person who fastidiously makes your bed every morning, don’t plunk down hard-earned cash on pricey bedspreads and decorative pillow shams. Stick with the basics, in simple colors or basic patterns, and straighten up as needed.

6. Turn on Good Lighting

You can usually identify a well-designed room by the type of lighting used — it’s always the exact right amount for the right time of day (or night). Is your bedroom suffering from too much light? Recessed pot lights are fine for the living room, but use a lot of electricity and can seem harsh in a bedroom. Consider installing a dimmer (between $60-100) to reduce the overhead glare. Alternately, your bedroom might have dim lighting that strains the eye. In either case, you can benefit from a few well-placed lamps that increase visibility without overloading the senses. Lamps are a wonderfully cheap accessory — check out IKEA’s selection before hitting Target or other big box retailers. Try out a new lampshade on an old fixture for an instant bedside accessory facelift.

7. Find Furniture That Fits

New or different furniture should be your last resort in redoing your bedroom, unless a change is drastically needed. Sometimes a new coat of paint or varnish can completely change the character of your dresser or headboard. Check out DIY websites for inspiration, but don’t get too caught up in the idea of completely overhauling every piece of furniture you own. A plain white table runner can hide a multitude of surface damage to dressers. Sometimes, wooden furniture just needs a good polish or scratch repair.

Have you successfully changed your bedroom recently? Have any tips for readers about how to make a bedroom a better place to sleep?

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This article is from Andrea Karim of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: