Thinking about transforming your bathroom, but it doesn’t seem financially possible? Don’t let financial concerns dash your hopes of a dream bathroom. Before taking out a loan immediately, take a moment to weigh your options. Here are three considerations you should make when financing a bathroom remodel in St. Louis!

Don’t Get A Home Equity Loan Just Yet!

On the surface, a home equity loan seems like a no-brainer. After all, you are using the money you already have invested into your house (and can’t access) to improve it. However, there might be more cost-efficient options, especially if you are considering selling your St. Louis home.

Home equity financing comes with two options:

  1. Home Equity Loan – Funds distributed in a lump sum. You pay back in a specified amount of time with a fixed interest rate. 
  2. Home Equity Line of Credit (HELOC) – Allows you to borrow money as needed at varied market rates. Once you pay your HELOC back, you can draw funds again until the “draw period” finishes. 

Home equity financing can be risky for some families because they are secure loans, meaning the borrower must put up an asset as collateral. With home loans, that collateral is generally the house itself. Default payments can result in the borrower losing their property. 

Take Advantage of Promotional Offers

Just as you’re trying to save money, licensed contractors in St. Louis want to make money. That’s why many professionals run promotions regularly to help St. Louis homeowners offset the expenses of a remodel. One of the most popular options is to finance directly with a store or contractor. Many offer up to 12 months with no interest. 

During that time, try to put any extra money towards the principal to limit high-interest rates after the year ends. To avoid any interest, many homeowners can pay off their financing plan within the year. 

Save Up Your Cash

Unless your bathroom has structural damage, there is no need to rush into a remodel. Talk to a professional St. Louis contractor specializing in bathroom remodels about your dream bathroom to get a realistic estimate. Once you weigh the pros and cons of financing options, you may decide that this project can wait a year or so.

Determine how much money you need to put away each week. Put that money into a savings account to earn interest. If you know this job is over a year away, you can earn even more interest on your money through a certificate of deposit (CD).  Unlike traditional interest-bearing savings accounts, CDs have term limits where you earn a locked-in interest rate monthly. If you close your CD or draw from it during that time, you will pay a penalty that might negate the interest earned through this investment. 

Saving up cash also opens the door to paying in cash. Many companies will offer discounts when you pay in cash because it lowers the cost of running credit cards and limits the chances of bounced checks. 

Plus, paying in cash means no interest! It’s a win-win for both parties.

Whichever financing option you decide on, it all starts with making an educated decision. Use this information to weigh your options. Never hesitate to contact a licensed contractor in St. Louis, like Mosby Building Arts, to get a quote for your bathroom remodel