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How to properly budget a home improvement project

Posted on Monday, August 29, 2016 at 2:20:42 PM

Thanks to several recent improvements in the United States economy, home improvement spending is booming. What's more, equities and values are rising, meaning that homeowners are being smart with their increased worth and putting those dollars into substantive projects. 

In addition to selecting the types of projects that will come with the most short- and long-term value, homeowners also need to ensure that they are going about the financing and budget process properly to maximize returns on investment. In some situations, especially when undertaking a large project, homeowners would do well to look into loan programs specifically targeted at home improvement use. 

Where to look
NerdWallet recently broke down some of the options available to homeowners who want to get financed on a home improvement project, affirming that the standards and practices vary widely among different types of lenders. For example, the news source pointed out that online lenders will tend to have exceptionally high interest rates that can end up costing homeowners dearly down the road. This is essentially the same in other categories of lending, including automotive and mortgages as well. 

According to the news provider, one of the best options available involves federal programs that will be offered and serviced through local banks. Renovation-based loan programs backed by the federal government are available and have competitive interest rates. On the other hand, NerdWallet pointed out that there are several programs, both backed by federal government agencies and other public entities, that can be acquired when trying to implement energy-efficient upgrades. 

Furthermore, the news source pointed to refinancing, home equity and personal loans as other options that can be used to alleviate the strain that a major home improvement project can have on a family's budget in the short term. When the project is going to cost more than a few thousand dollars, loans will often be the best route to travel.

Work with smaller banks
Small, community-based lending establishments will tend to be the best options when trying to identify and get approved for the best possible loan in accordance with a homeowner's specific needs, objectives and financial capabilities. Always consider working with one of these institutions rather than going online or heading to a massive bank, as the customer service and support will tend to be superior.