Bryce Stevenson Home Designs on Home Projects
When a homeowner chooses to embark on a home remodeling project, the process can be extremely daunting. Deciding what features to add to the home, selecting a budget, and finding the right contractor to complete the work are all part of this complex process. Financing a remodeling project represents the most difficult of all the aspects in a home remodel.
Panda Windows has worked with building contractors and homeowners for many years. Our company knows first-hand how difficult remodeling projects can be from a planning and construction perspective. In this blog post, we will discuss some of the financing options available to homeowners, particularly in “non-borrowing” options. Let’s get started!
If you’ve decided to remodel your existing home, you may have discovered that there is an overwhelming number of decisions to make. In addition to setting a budget and finding the right contractor, homeowners must also make decisions about features, additions, and deletions, improving the style, function, and beauty of their homes.
Let’s say you’ve picked a contractor and are ready to get started on a remodeling project. How will you pay for it? While many people think of bank financing as the ideal solution, not everyone wants to (or can) take out another mortgage or bank-backed loan. So, homeowners across the country are seeking other options. Exploring these other options is the goal of this article.
Non-Borrowing Finance Options
There are alternatives to a bank loan or mortgage refinancing to help pay for costly home upgrades. These are often referred to as “non-borrowing” solutions. While there are many advantages to using this method to pay for home remodeling projects, the primary drawback is the amount of funds available without depleting important family savings and retirement finances. These non-borrowing options include:
Paying with cash – funding a remodeling project with cash is a possibility, especially for smaller projects that aren’t eligible for bank loans. Cash represents a great option for simple projects such as repainting interior walls, adding smaller built-in features like shelving or bookcases, or replacing fixtures in the kitchen or bath. The fact of the matter is that few homeowners have sufficient cash reserves set aside for dramatic full-home remodeling projects, however.
Withdrawals from retirement accounts – under certain conditions, homeowners may withdraw a portion of the value of retirement accounts like IRAs and 401(k) plans. For larger projects, this may be a valid solution instead of a bank loan. Remember, though, that any qualified withdrawals you take from retirement account reduces the amount available to you after you retire. Unqualified withdrawals, on the other hand, can result in significant tax penalties. Consult with a retirement planner or tax professional to see if this option is right for your remodeling needs.
Liquidating financial assets – do you have collectibles gathering dust, a classic car you don’t use, or stock and bond investments? Each of these represents a possibility for funding a home remodeling project. Selling unneeded or unwanted assets can free up the funds necessary to pay for home upgrades – depending on the value of these assets, a homeowner could conceivably fund a full home remodel without borrowing a penny from the bank. Before embarking on an expensive home remodeling project, it is critical that homeowners discuss options with their building contractors. Contractors often have insights into non-borrowing options, helping you to pay for the remodeling and upgrades of your dreams without having to get a loan.
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