As a military family, you may become restless after living in the same place. To cope, you might rearrange furniture or paint a wall. Sometimes, you consider even bigger projects to make your current home more like your dream home. Home improvements and renovation projects are a great way to increase your home’s value and encourage you to stay there longer. And while some of those projects may come with a big price tag, you may find comfort in knowing it’s still much cheaper than starting over from scratch. Whatever your ideas are, there’s a smart way to fund them.
The bathroom needs a facelift.
When you move into a new home at your new duty station, you may want to make a few changes to the home, but nothing major. After all, the chance of moving again is very high. If the home improvement you want to make includes upgrading lighting, replacing sinks or faucets, or adding some shelves or closets, you’re considering minor improvements. Even new paint is considered a minor improvement. While most people don’t think of leveraging credit cards for home improvement projects, experts say they can be another helpful financing option for minor upgrades like these.
“For small projects you can pay off quickly, a rewards credit card is a good tool to help fund your next home improvement project,” said Rick Conyers, assistant vice president of credit card products at Navy Federal Credit Union. “The Navy Federal Visa Signature® Flagship Rewards credit card is a great option since you'll earn 2X points for every dollar spent.”
If you don’t have the money set aside or don’t want to wait to save cash, you can use a credit card for this. A credit card is best for renovation costs; you can pay off them quickly or for emergency repairs, as the money is available quickly. Navy Federal has a line of credit cards; some offer rewards or cash back.
My kitchen needs all new appliances.
Not all home improvement projects need to be huge; some smaller projects can increase the value of your house while making a big difference in your everyday surroundings. It may seem daunting to replace your kitchen appliances or change the flooring, but since these are not complete renovations of an area, they’re considered mid-level improvements.
Something to keep in mind when looking at some mid-level improvements is not to over-improve your home. If this is your “forever” home, you’ll make decisions differently than if this is a “right-now” home. Focus on improvements that increase your home’s value without making it the most expensive in the neighborhood.
I want to add a loft over the garage.
If your renovation or improvement plan includes tearing down a wall or section of the house, creating a new interior layout or reconstructing an entire space (walls, lighting, appliances, etc.), you will find yourself in the middle of a major renovation. These can be expensive, but two great options are available: a home equity loan and a home equity line of credit, known as a HELOC. The biggest difference is how you receive the money. A home equity loan is for a specific amount on a fixed interest rate with monthly payments and is paid as a lump sum. A HELOC allows you to draw money from the line of credit as needed, so you don’t need to know exactly how much your project will cost upfront.
Which one should you get?
The first question you should ask when deciding which home equity option you’d like to use is how much money you need and how you plan to use it. Make sure you are aware of any fees, interest rates, and monthly payments. You’ll also want to review the equity of your home, which is the collateral for your loan or line of credit. Consider whether this major improvement will increase your home’s equity more than the cost of the work. As with all loans, the terms and conditions vary from lender to lender. Make sure you trust the financial institution and that they understand the military lifestyle.
“As with any financial decision, it’s best to do your homework and shop around,” said Adam Fingerman, vice president of equity lending at Navy Federal. “It’s important to explore all of your options and make sure you’re choosing the right financing option for your personal financial goals.”
How to apply for a home equity loan or HELOC
Before you apply, you’ll want to gather the following information to make the process easier.
- Estimated value of the property
- Gross monthly income
- Current house expenses (taxes, dues, insurance, and loan information)
- Original purchase price and date
- When the house was built
Improving your home has so many benefits, both to you as you live there and when you sell or rent it when your time at that duty station—or in the military—is up. Making a smart financial decision will pay off in the future.
Navy Federal Credit Union is federally insured by NCUA. Equal Housing Lender.
