Flooring is a home improvement exercise that can prove expensive. In the year 2018, the average home improvement cost in the USA was $39,211. Some large-scale improvements, on the other hand, cost as much as $130,000. If you are planning to renovate the floor of at least one of the room’s in your home and you have not set aside money for that purpose, you require financing. You should figure out what flooring financing options are best for your project.
Factors that Influence Flooring Financing Amounts Required
First things first. Before you can finance your flooring, you should first establish the total amount of money required. The flooring cost largely depends on the magnitude of the project, meaning how many rooms you are renovating and how big the rooms are. Another essential factor is the flooring type chosen. Some floors are more expensive than others.
Different Flooring Options
First, decide on the flooring type you want to install. There are different flooring types in the market. Some include hardwood, carpet, laminate, vinyl, tiles, and luxury vinyl tile flooring. Various factors influence the choice of the flooring type. Some of the factors include the amount of traffic in a room daily and how water-prone the room is. In addition to that, you should choose a flooring type depending on the room’s purpose; for example, bedrooms require more comfort than kitchens. What’s more, your personal taste and preference and current flooring trending styles will also influence the type of flooring you choose.
Get Quotes from a Flooring Store or Contractor
Once you decide on the type of flooring you want, get quotes from your nearest flooring store or manufacturer. It is advisable to work with a supplier of flooring materials near you. Get the dimensions of the rooms that you are renovating so that it is easy to get a quote on the spot. You can visit their showroom and have a look at what they have.
It is essential to discuss with the flooring contractor about your planned flooring renovation project. Ask the supplier to give you a quote that should incorporate flooring installation costs. In every project, there are unforeseen costs. As such, add a small amount, maybe 5% of the estimated costs for contingencies.
If you are renovating to add value to your home, ensure that the renovations will enhance your property image. This is especially so if you want to sell your home after the renovation.
After establishing the approximate cost of the flooring improvement project, you can approach a financial institution for carpet and floor financing. There are also flooring companies with financing options; find out if the store near you is a financier. You can also check for flooring stores with financing near where you live. Alternatively, the flooring store can link you up with financing institutions.
You should get a lender who can give you the amount your need for your home improvement at a reasonable interest rate. When evaluating financing options, evaluate between fixed and variable interest rates.
The best method of financing your home improvements is using cash because it is the most cost-effective option. You do not deal with financial institutions, monthly payments, or interest rates when you use cash. It is also convenient; you won’t wait for loan approvals. However, it requires you to save upfront before engaging a contractor. You can do the renovations one room at a time, depending on your budget.
2. Credit Card Financing
You can easily finance a home improvement with a credit card. The advantage of credit card financing is that you do not have to apply for a loan. You can use your credit card, especially if you have savings aside for your home improvement project. Using credit cards gives you value for money if you can pay the cash at the end of the month. To avoid high interest rates, you should pay the whole amount by the end of the month.
3. Traditional Home Improvement Loans
You finance your flooring project with a home improvement loan. Financing institutions offer home improvement loans which allow homeowners to borrow a lump sum to finance installations costs and costs of purchasing the materials. The amount is unsecured, which means that they have high-interest rates than secured loans. The interest rates depend on the financial institution, the total loan amount, and the repayment period.
4. Personal Loans Including Personal Lines of Credit
There are two types of personal loans, secured and non-secured loans. Most lenders will give you a personal loan depending on your credit history. You can consider a personal loan, especially if the project is small. Most lenders will offer personal loans of up to $50,000. This loan is not linked to your home equity. It usually has a fixed interest rate paid over a fixed period of time.
Personal lines of credit are ideal for projects that are hard to estimate how much they will cost. It helps in managing the costs of the project because you only withdraw when you need to spend. Its main disadvantage is that it has variable interest rates, which can get expensive in the long run.
5. Mortgage Refinancing
If you are looking for low-interest rates, then refinancing your mortgage can offer that. Refinancing mortgages is a common way that homeowners use for home improvements. When refinancing your mortgage, the lender determines how much you can borrow by examining how much your property has appraised in value. The value is what financial institutions call home equity. Home equity occurs if you have been paying your mortgage as required and if the home has appreciated from the time of purchase. However, do not cash out all the equity on your home.
Always consider your original financier, how much mortgage refinancing they can offer you, and the repayment terms. You can compare their rates with one or two other financiers. Then, choose the lender with the lowest interest rates and monthly payments you can repay without straining. As much as possible, work with an attorney to ensure that you understand your agreements (all the paperwork).
6. Home Equity, Home Equity Line of Credit or a Hybrid
Another way to finance your flooring is by using home equity loans, home equity line of credit (HELOCs), or a hybrid of the two systems. This is popular because they are long-term with low monthly installments.
Your home secures a home equity loan, and as such, its interest is low. However, you can lose your home if you default on the loan. In a home equity loan, the lender will give you a specified amount of money to be paid in a certain period of time that is usually long-term, between 15 to 30 years. The interest is usually fixed. Once again, it is important to understand the paperwork to ensure there are no hidden costs.
You can also opt for a home equity line of credit financing where the lender doesn’t give you a lump sum amount of money to begin with. Because you may not know how much you will incur eventually, the lender activates a line of credit, but with a ceiling and a draw period. In the draw period, you will only be paying the interest accrued but not the principal amount. You will keep withdrawing until your project is complete. Noteworthy, you should be careful because this type of financing has variable interest rates.
What about Flooring Financing for Bad Credit?
If you have a bad credit record, then you should seek a financial institution that can give you flooring financing with bad credit. Unfortunately, they will have less-friendly terms. Actually, the only flooring finance option available may be personal loans. Personal loans have higher interest rates, higher monthly payments, and short repayment periods than home loans.
Other Financing Options
There are other financing options that are not very common and are available in only some financial institutions. You can consider them if you have run out of options. They include renovation or construction loans, B/C loans, Federal Housing Administration (FHA) Mortgages or loans, and Energy Efficient Mortgages. In this regard, find out from your financial institution about other financing options they have. Apart from that, you can consider peer-to-peer lending institutions.
There is a wide range of flooring financing options available. It is advisable to shop around and work with the option that gives you value for money in the long run. If you are not an expert in financing and don’t understand loan terms, it is advisable to get an expert to help you read in between the lines.