It is always a good idea to repair or remodel your basement as long as you have enough means to pay for your chosen contractor and other necessary expenses. If at this point you don’t have the slightest idea on how much you would normally spend, bear in mind that the estimated average cost per project per area would be USD 448.72.
If you were able to maintain good credit standing with any bank and you have steady sources of income, there are four funding options that you can choose from:
Credit Card – Consider yourself lucky if you’ve got a high spending limit on your credit card, which can be beneficial to you in paying for a partial or full basement repair/remodeling job. Make sure that your contractor accepts this type of payment, otherwise request checks from your bank or any other kind that can utilize your credit card as funding source. There is an advantage as well as disadvantage in credit card payments for home improvement expenses: your payment is received immediately and the project can start anytime, but the higher the cost, the higher the interest fees that will be charged to your monthly billing statement.
Home Equity – Your home equity can be of help in home improvement expenses, so consult with your bank regarding the best home equity loan or line of credit that you can use. A basement renovation project can result to a maximum of 75% of how much you’ve spent as the current value of your home. If you’re offered a loan, they will give your requested amount of money in full and you pay them back in the form of monthly installments. If they grant you a home equity line of credit instead, you get to spend it based on how much you need and pay back every month just like how you use a credit card.
Government housing loans like the Title I Loan (U.S.) – The Title I Loan, offered by the U.S. Department of Housing and Urban Development, works both ways: it provides home improvement loan lenders the needed insurance, and it makes payment plans more affordable to clients who are not qualified for standard home equity funding after paying 1% of their requested loan amount. Better clarify with a Title I lender nearest you if they can assist you and discuss your basement remodeling or repair requirements, as more and more contractors are open to this loan type.
Contractor Financing – This financing option works best with big-budget projects — it’s paying in cash but in staggered amounts. A contractor who offers this would require you to pay a certain amount as deposit, followed by several installment payments with the last payment normally after remodeling/repair has been completed to be sure there are no more pending jobs once the contractor receives your full payment. Installment payments and payment deadlines will be based on an invoice prepared by the contractor and the terms agreed upon prior to starting the project.
Have you already decided? Study these options and their corresponding pros and cons carefully for a hassle-free transaction with your contractor.