Making financial decisions can be stressful. But with great financial tools, you can avoid the stress. Deciding whether to take on debt to improve your home is an incredibly important decision, but Fiona’s search engine can help.
When it comes to using a personal loan to fund home improvements, you have to determine if it’s a worthwhile investment in the long run. It’s important to determine if the improvements you make will increase the value of your home or increase your quality of life going forward in order to make the debt worthwhile.
Below, we break down the two key reasons why you may consider taking out a personal loan for home improvement.
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Increase Home Value
Increasing the value and equity of the house or property is one of the most popular reasons why homeowners take out personal loans for home improvement. Note we also mentioned the property as well as the house: home improvements can include adding curb appeal or adding value to the property itself, such as installing a privacy fence or hiring a landscape architect.
Let’s say your home is valued at the same price you purchased it, which is $100,000. Let’s keep the math simple, and say that adding an extra bedroom or new bathroom might increase your home value to $120,000. Therefore, if the renovation project costs substantially less than $20,000, the equity added to your home will pay off in the long run.
Remember to get recent appraisals of your home and property from qualified experts. You’ll need up-to-date numbers to make sure you are fully informed and can make the best financial decision for your household.
Is there a home improvement project that you require in order to make a part of your home more functional for your family? Maybe, for example, you need a loan to make your walkway or shower more accessible for an aging or infirm family member. Though some projects may exceed the cost of the loan in terms of the equity value they add to your home, they still improve your life at a rate that the loan cost is more than worth it to you and your family. It is, of course, crucial that you ensure you’re able to fit the monthly payments for a personal loan into your budget before you commit to the loan and the renovation project. If you are able to make it work, it’s perfectly okay to decide that an increase in quality of life is a necessary expense for your household, but make sure you completely understand all the numbers involved so you know exactly how much you are paying for that increase.
Home improvement can be intimidating, but searching for a personal loan to finance your renovation project shouldn’t be. Make sure you have a chance to review all available options before you decide which one will best help you achieve your goals. Start your home improvement journey today.