In this post you’ll learn ...
- How to determine what kind of space you would like to add to your home.
- How to foot the bill - financing options through our trusted partners.
- What you should do if you decide to finance.
5 Steps to Take When Financing Your Home Addition
Is your home feeling a little cramped? Do you wish you had just a little more space? If this sounds familiar, you can move to a new home or find ways to increase the living space in your current home.
Home additions come in many shapes and sizes. You can add extra space by adding a garage, a sunroom, or by adding on another room complete with insulation, drywall, etc. Once you’ve decided to expand your home, you have to determine how you’ll pay for it. Financing is a popular option because it allows you to spread the cost out over several months or years. If you choose to finance your home addition, there are several steps you need to take.
1. Decide on a Budget
Before you decide which type of home addition you want, decide how much you can spend in order to meet your expectations while sticking to your budget.
Do you have money saved up for this project? How much do you have? Whether you have a significant amount of savings or not, you can often finance your home addition. When financing, you also want to consider your monthly budget in addition to your overall budget. How much can you afford to pay each month?
If you find that all the quotes are out of your price range, you may need to scale back or take some time to save up before beginning your home addition.
2. Decide on Addition Type
To decide on the type of home addition you want, think about how you will use the room and what kind of space you’re lacking. For example, a four season sunroom might be a good fit to provide you with more living space. You can use a sunroom as a breakfast room, a place to entertain, a yoga retreat, or as a place to simply enjoy natural light without having to go outside. These rooms can be used all year and add value to your home.
Adding a bedroom or a bathroom to your home also gives you more space, and this addition can greatly increase your home’s value. This might be a good option if your family is growing or if you want more space for guests. Adding a traditional room will typically be more expensive and time consuming than adding a sunroom.
If you like the natural light a sunroom provides, but need more traditional living space, you can have the best of both worlds with a traditionally-framed sunroom. Some contractors, such as the experts at your local Patio Enclosures, can build these rooms with drywall, insulation and wood frames while including as many windows as you choose. This is a great option if you want a sunroom that can also serve as a bedroom, living room or family room.
3. Find a contractor
Once you have a budget and room in mind, you can pick a contractor. Find a contractor with a good track record and a reasonable quote, such as your local Patio Enclosures. Look up reviews for the contractor. You can even ask for references and contact them. Some things to ask people who have worked with the contractor in the past include the following: Was the project completed on time? If not, why? Did the project go over budget? If so, why? Was the project completed to your satisfaction?
4. Find financing and know what you’re signing
With financing you can turn an expensive project into a manageable monthly cost within your budget. The best place to start your search is with your contractor because they may be able to help you with financing.
Patio Enclosures, for example, works with GreenSky® Trade Credit to provide a variety of financing options. GreenSky even offers “no interest, no payments for 1 year." This means that you can spread the cost out over 12 months, but you don’t have to pay interest. This might be a good idea for a small home addition project. They have other financing options as well so you can choose which option fits your budget the best.
Before you sign anything, always read the fine print and know how much the entire project will cost (your contractor can provide this information). Some questions that you need to ask the lender include the following.
- What will the interest rate be?
- Will the interest rate stay the same during the tenure of the loan?
- If you are getting a variable rate loan, when will the rate change?
- What fees will be charged to service the loan?
- Will there be any additional fees if you choose to pay off the loan early?
- What will your monthly payments be?
- How many payments will you make?
- What will happen if you miss a payment?
5. Make your payments
If you choose to finance, you will need to make sure you can make your payments on time and in full. Missing a payment can have a negative effect on your credit score, and you might be charged a late fee. You will probably get a phone call from the lender as well. Continue missing payments, and you’ll receive more phone calls and late fees. You can even find yourself facing legal action.
For this reason, you want to be sure that you can afford the monthly payments. If the estimated payment is outside of your monthly budget, wait until you have the right amount saved up and set aside. If you’re in dire need of space, consider other options that are more affordable such as a smaller project, a different finish, or different building materials.
Adding on to your home can raise your home’s value and improve your quality of life. To get started, calculate what your budget is and forecast any changes that may occur for you financially. Then, decide on a space that fits within that budget and contact a good contractor. If you decide to finance, be sure that you understand everything before you sign the loan. Finally, make your payments on time and enjoy your new space.
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