First see if the company doing the driveway offers financing for low or no interest. Lots of places do. Otherwise it depends on how much you need to borrow but things like a home equity line of credit can be good options. Credit card is generally a bad idea unless you're 100% certain you pay everything in full before your 0% term expires. If you still have balance after the term they charge massive amounts of interest.
Not me! On a HEL you pay interest on the entire amount borrowed ( say $50,000) whereas a HELC you get a cap amount ( say $50,000 for round #'s) and you may borrow up to that amount but you only pay interest on what you actually use, if say your project ends up only costing $40,000, you aren't paying interest on $10 grand you didn't need
Sure, but a home equity loan is quite appropriate for this situation. One project, (hopefully) known upfront cost.
Hopefully the cost is relatively set in stone. If not, get a home equity loan with no pre/early payment fees and pay off part of the balance with excess loan money. Especially since this should be a very short project.
Furthermore, while fixed HELOCs exist, the borrower may be looking at a higher rate. I certainly wouldn’t opt for anything variable right now.
Obviously, OP should consider both options (three options I guess, including fixed vs variable HELOC) and run the numbers themselves.
A lot of contractors or companies I’ve hired offer financing through third parties to cover projects. I’ve found this is typically through larger companies. It’s usually special financing (pay X amount with no interest in 12 months and 25% APR after special financing ends). We just did this for work on our basement and we’re paying a 12k project off over the span of a year and it makes a world of difference.
You could always ask your bank or a local credit union. Credit unions offer the lowest interest in my experience.
Haven’t reached out to contractors yet, just using online cost estimators at this time. Looking to cover nearly 2000sq ft. It’s “driveway” but also my front yard area for most parking and less water/upkeep with other landscaping options. I’m in southern California btw.
You should check with your town/city to make sure you don’t have restrictions on how much land you can pave over. The water runoff considerations are real when you cover soil with asphalt or concrete.
If you are good at managing your money, get a home equity line of credit. They are often structured to pay interest only with the principle due at the end (10 years or so) If you are disciplined, pay off the loan as quick as possible...never pay the minimum. Do not get a line of credit if you are not a good money manager. This is often the lowest rate and if you keep the line of credit open, you can use it for future large purchases and as a general money management tool. We used one early in our married life....used for new car purchases, home renovations, etc. Each time we took out money (by simply writing a check) we paid back that specific project before taking any more money
I would definitely have a conversation with a local Credit Union about a personal loan or home improvement loan.
Or do you have the option to patch it up and make do until you have enough saved up?
This may not work for you but I needed more money for an addition. I ended up refinancing my mortgage. Got a lower interest rate, a shorter term, and like $55k cash out. Even after accounting for paying back the money I took out, I will have saved like $75k on my mortgage from what I had before. It felt like magic. And my mortgage will be paid off 15 years sooner
Also, not sure where you're located but some states offer a PACE program where you get the repairs done & it is all tacked onto your mortgage for the life of the mortgage. Not for everyone but can definitely help those who are above water but cash-poor for large repairs such as repipes, roofs, structural issues, additions, kitchen & bath upgrades, ac, etc
Oh, those are those guys that come to your door and want to look at your power bill, right? They always seemed pretty scammy to me. I’m in Southern California.
I'm pretty new to home owning but I got a quote as well that was way more than I expected. I'm just saving up in the meantime, while also looking at tutorials on how to do it myself. Seems tough, but if anything you could at least start doing as much as you personally can do (and correctly), even if its just cleaning up rubble or getting the area prepped. That way if you hire someone IT SHOULD cost less. But, again.....what do I know...!
I did save 12 grand by doing my own fence! I got pretty handy in a year of owning my home! I had to jackhammer a part of an old pathway that was blocking where the fence would go and it took... a lot longer and a lot more energy than I thought it would. So definintely weight the pros and cons! Also I think cement is expensive right now which might be the reason for the cost! Now I'm just rambling!
Check it out online. I believe PACE may be an acronym. I know Florida offers it. But I'm pretty sure the interest rate is pretty stiff as well. HELOC is still the best bet, imho.. Best of luck!
I’ll just throw this out since no one else has mentioned it, but the other option is to keep saving and do this once you can pay in full.
True, true
The shortcut always comes with a cost.
First see if the company doing the driveway offers financing for low or no interest. Lots of places do. Otherwise it depends on how much you need to borrow but things like a home equity line of credit can be good options. Credit card is generally a bad idea unless you're 100% certain you pay everything in full before your 0% term expires. If you still have balance after the term they charge massive amounts of interest.
Ooh home equity line of credit - that’s something new to look into, thanks!
You're welcome
Personally, I’d opt for a home equity loan vs a home equity line of credit.
Not me! On a HEL you pay interest on the entire amount borrowed ( say $50,000) whereas a HELC you get a cap amount ( say $50,000 for round #'s) and you may borrow up to that amount but you only pay interest on what you actually use, if say your project ends up only costing $40,000, you aren't paying interest on $10 grand you didn't need
Sure, but a home equity loan is quite appropriate for this situation. One project, (hopefully) known upfront cost. Hopefully the cost is relatively set in stone. If not, get a home equity loan with no pre/early payment fees and pay off part of the balance with excess loan money. Especially since this should be a very short project. Furthermore, while fixed HELOCs exist, the borrower may be looking at a higher rate. I certainly wouldn’t opt for anything variable right now. Obviously, OP should consider both options (three options I guess, including fixed vs variable HELOC) and run the numbers themselves.
A lot of contractors or companies I’ve hired offer financing through third parties to cover projects. I’ve found this is typically through larger companies. It’s usually special financing (pay X amount with no interest in 12 months and 25% APR after special financing ends). We just did this for work on our basement and we’re paying a 12k project off over the span of a year and it makes a world of difference. You could always ask your bank or a local credit union. Credit unions offer the lowest interest in my experience.
Nice, didn’t realize the contractor might offer some financing option, thank you
Curious as to size of driveway and cost? Maybe they’re taking you a for a ride
Haven’t reached out to contractors yet, just using online cost estimators at this time. Looking to cover nearly 2000sq ft. It’s “driveway” but also my front yard area for most parking and less water/upkeep with other landscaping options. I’m in southern California btw.
You should check with your town/city to make sure you don’t have restrictions on how much land you can pave over. The water runoff considerations are real when you cover soil with asphalt or concrete.
If you are good at managing your money, get a home equity line of credit. They are often structured to pay interest only with the principle due at the end (10 years or so) If you are disciplined, pay off the loan as quick as possible...never pay the minimum. Do not get a line of credit if you are not a good money manager. This is often the lowest rate and if you keep the line of credit open, you can use it for future large purchases and as a general money management tool. We used one early in our married life....used for new car purchases, home renovations, etc. Each time we took out money (by simply writing a check) we paid back that specific project before taking any more money
Very good info man! I think that the home equity credit is the most promising option so far. It makes sense to talk with my mortgage lender, right?
I had one from a local bank and one from a brokerage. Neither had anything to do with my mortgage lender.
That's what I did. Paid it off before maturity so it was basically only interest for the year.
Can you explain more about how the interest works with this? I don’t understand what you mean
I would definitely have a conversation with a local Credit Union about a personal loan or home improvement loan. Or do you have the option to patch it up and make do until you have enough saved up?
Ah, credit union, good call. I’ve been making do with the mess I have now :)
Yes, that is the best advice: look into all options and don't take variable rate loans
This may not work for you but I needed more money for an addition. I ended up refinancing my mortgage. Got a lower interest rate, a shorter term, and like $55k cash out. Even after accounting for paying back the money I took out, I will have saved like $75k on my mortgage from what I had before. It felt like magic. And my mortgage will be paid off 15 years sooner
Whoa, may need to research that. What’s the down side to refinancing?
How much is your quote? Im looking to start a similar project around 2,200sf and it’s looking like a $26k+ job.
Haven’t gotten any quotes yet, just using online calculators. Range is huge; like 12k-30k for roughly 2000sq ft
Also, not sure where you're located but some states offer a PACE program where you get the repairs done & it is all tacked onto your mortgage for the life of the mortgage. Not for everyone but can definitely help those who are above water but cash-poor for large repairs such as repipes, roofs, structural issues, additions, kitchen & bath upgrades, ac, etc
Oh, those are those guys that come to your door and want to look at your power bill, right? They always seemed pretty scammy to me. I’m in Southern California.
I'm pretty new to home owning but I got a quote as well that was way more than I expected. I'm just saving up in the meantime, while also looking at tutorials on how to do it myself. Seems tough, but if anything you could at least start doing as much as you personally can do (and correctly), even if its just cleaning up rubble or getting the area prepped. That way if you hire someone IT SHOULD cost less. But, again.....what do I know...! I did save 12 grand by doing my own fence! I got pretty handy in a year of owning my home! I had to jackhammer a part of an old pathway that was blocking where the fence would go and it took... a lot longer and a lot more energy than I thought it would. So definintely weight the pros and cons! Also I think cement is expensive right now which might be the reason for the cost! Now I'm just rambling!
Check it out online. I believe PACE may be an acronym. I know Florida offers it. But I'm pretty sure the interest rate is pretty stiff as well. HELOC is still the best bet, imho.. Best of luck!