Millennials tend to have a bad reputation – you often hear that they tend to spend their money on avocado toast and gourmet coffee instead of using their money responsibly. But in reality, millennials are taking steps to get their finances in order, namely buying houses to achieve the stability that comes with owning a property.
Many millennials were inspired to become property owners during the pandemic, according to a new poll by Angi, a home renovation network. For some, it was a matter of getting more space while they were stuck at home. For others, it was a desire for more peace and quiet.
But because housing inventory was limited during the pandemic, many young buyers were stuck in homes that required a lot of work. In fact, 56% of millennial shoppers have purchased homes in need of renovation and are spending a lot as a result. Nearly 70% of Millennial homebuyers have a renovation budget of $ 25,000 or more, and nearly half say they will spend $ 50,000 or more to improve their homes.
If you’re a new homeowner who needs renovations, your options may be slightly more limited than if you were the permanent owner. Long-term homeowners, especially in today’s market, may have access to borrowing options such as home equity loans, home equity lines of credit, or cashing refinancing… But if you’ve recently acquired your property, you may not have any home equity yet, which means you cannot directly own enough of your home to borrow. But if so, you’re out of luck.
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How to fund improvements as a new homeowner
If you have purchased a home that is in desperate need of change and you cannot use your own capital because you have not lived in your home long enough to build it, then repair loan might be a good solution for you.
As the name suggests, a home improvement loan allows you to borrow money to improve your home. Most of these loans allow you to borrow a fixed amount that you have to repay in equal installments over time. And the higher your credit rating, the more likely you are to qualify for a lower interest rate on a repair loan.
In fact, a home renovation loan is generally much preferable to paying for a home renovation with a credit card. If you go this route, you can get stuck paying much more interest on the amount you borrowed.
Now, if you are an equity homeowner, you may decide to take advantage of today’s minimum. refinancing rates and refinance with cash when you borrow more than your existing mortgage balance and use the remainder to pay for repairs. But since this option may not be suitable if you recently bought a home, a renovation loan is a good alternative.
Whether you’re a millennial or not, if you’ve bought a home that needs improvement, consider a renovation loan if you can’t cover your expenses in cash. Home renovations can add value to your home, and if you stick to a tight budget, you may find that paying for these improvements is more manageable than expected.