The 5 Best Ways to Finance a Bathroom Remodel in 2024
1. Use Cash and Liquid Assets
One straightforward way to fund your bathroom remodel is by using cash or quickly accessible liquid assets. These include checking & savings accounts, mutual funds, savings bonds, and CDs nearing maturity. To mitigate the impact of current high interest rates, consider splitting the cost between cash and credit. For those who have a pension, this is a great route.
2. Home Equity Line of Credit (HELOC)
A HELOC allows you to borrow against the equity in your home, providing a flexible line of credit similar to a credit card. This is a great option for home owners in areas, such as Southern California, that have seen explosive increases in home prices, many of which have doubled in less than a decade.
3. Home Equity Loan
Another option is a home equity loan, which provides a lump sum at a fixed interest rate, allowing for predictable payments over the loan term. This can be advantageous if you plan to pay off the remodel within a few years, despite high interest rates, as the fixed rate provides stability. The remodel will definitely pay for itself in the additional equity it provides.
4. Cash-Out Refinance
A cash-out refi involves taking a new mortgage for more than you owe on your home and receiving the difference in cash. This is an excellent option for those with paid off homes, and those who also have rental and investment properties. A cash-out refi might offer lower interest and fixed terms, potentially reducing your monthly payments even in the current market.
5. FHA 203(k) Home Improvement Loan
The FHA 203(k) program offers loans for home renovations, allowing you to borrow against the future value of your home. This program includes two options: a limited 203(k) for smaller projects with fewer inspections and a full 203(k) for extensive renovations, including structural, health, and safety improvements. Both options come with mortgage insurance premiums, making them a solid option if you are doing significant remodeling.