Basement Remodeling Loans: Everything You Need to Know

Your basement is one of those areas in your home that you can use for just about anything. Plus, you can renovate your basement without causing much interruption to your family or turning your home’s interior into an eyesore.

So, what do you do when you want to remodel your basement but you don’t have the necessary funds? Continue reading to learn everything you need to know about getting a loan for your basement remodeling project.

Do your research and set a budget.

The key to any remodeling project is to do some research before setting anything in stone. When renovating any area of your home, you never want to walk blindly into the project.

The main thing you’ll be looking for in your research is how much you can expect to spend on your renovations. Online, you can easily find out what people in your area pay on average to remodel a basement. The best resources are those closest to you, so consider posing your renovation questions on a neighborhood app like NextDoor. You should also get at least three estimates from remodeling companies to see what they have to say specifically about your basement. Use what you learn to set your budget, and don’t go over it.

Shop for a loan.

Once you have an idea of what you’ll have to pay for your remodeling project, it’s time to shop for a loan. Educating yourself about different types of loans and how they work is a crucial step in the loan process. Again, what you don’t know might very well hurt you.

If you’re selling your home and remodeling your basement to increase your home’s value, consider a bridge loan. A bridge loan is a type of loan that allows you to borrow funds for an immediate financial need while waiting for other funds to clear (like expected income from a house sale).

Usually, bridge loans are used to purchase a home while waiting for a house to sell. But the same concept works to cover the cost of remodeling your basement when you know you’ll have cash coming in within a few months. Once your house has sold, you can pay the loan off.  Bridging loan lenders offer a variety of terms and conditions, but in general bridge loans are considered short term, stop gap solutions.  They generally carry higher interest rates than alternatives like home equity lines of credit (HELOCs).  Bridge loans are highly customizable, but borrowers should be careful with them to be sure they don’t get in over their heads.

Shop around for the right people for the job.

One of the hardest parts about doing a remodeling job in your basement is finding the right people for the job. You want to work with a company that’s going to be timely, mindful of your budget, and exhibit professionalism in your home.

One of the easiest ways to find the best basement remodeling company in your area is to ask around. Word of mouth is still a great way to find the most trusted merchants and service providers.

Don’t stop at asking your neighbors and friends who they trust—consult the internet as well. There are websites that have registries and rankings for contractors. As a homeowner, you can never be too careful about who you invite into your home.

Basement Guides is a website that explains who you should call in your area for a variety of basement solutions. With the insight you gain from their website, you can arm yourself with the information necessary to make the best choice for your project.

Come up with a strategy to repay your loan.

When working to secure a loan, keep in mind that at some point you’ll have to repay it. Ironically enough, paying off debt is one of the main ways people find themselves digging debt holes.

Whenever you take on a new loan, you’re adding another financial burden to the ones you already have. You need to have a strategy to repay your loan ahead of time before it becomes a detriment to your credit and financial health.

One simple strategy to pay off loans quickly is to pay more than the minimum monthly payment. Whenever you have a little extra expendable cash, put it towards your loan, and watch the principle shrink.

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