Garage installation is an investment that enhances your home’s value and functionality. Beyond securing your vehicle, it is beneficial in many other ways. For instance, most homeowners use it for storing equipment and seasonal items, helping declutter their living spaces. Hobbyists can also use the garage as a workshop.
Unfortunately, the financial commitment of constructing a garage can prove substantial, often deterring homeowners from undertaking this project. However, interested homeowners can complete their garage installation using various financial options. Common options include:
Personal Loans
Personal loans for garage installation are preferred for their flexibility and accessibility. Unlike other options, they are unsecured, and they can be used flexibly. They also have a fixed rate, which means monthly payments won’t change.
However, the main disadvantage is they attract high interest rates. They also affect your credit score. The high rate is primarily because there is no collateral. However, your credit score is an essential factor in determining the interest rate and loan terms. Generally, borrowers with good scores enjoy favorable rates and terms.
Unlike before, applying for a personal loan is very simple. Begin by assessing your credit report. You should then find a lender and compare their terms to find one that best fits your needs. Submit your application depending on the loan amount and wait for approval.
Construction Loans
Construction loans are specialized options that can be used to cover the costs of buildings or renovations. This makes them a perfect option for homeowners planning to install a garage. These loans differ from traditional loans, as they provide funds in phases.
Ideally, you should have a detailed construction plan and choose the best garage builder and contractor before applying for the loan. After you’ve secured the loan, you should share your construction schedule since lenders don’t disburse the funds at once. They only pay after specific project milestones have been completed. Lenders also inspect to verify that the work has been completed and your claims are valid.
Cash-Out Refinance
This is a common option for homeowners planning significant improvement projects. Replacing a mortgage with a better option allows homeowners to take advantage of the equity they have built. Therefore, the refinanced amount offered by lenders is mostly equivalent to your home equity.
Refinancing to fund garage installation projects is beneficial in many ways. For starters, homeowners can access significant amounts of cash. You can also potentially secure low interest rates, especially if the current mortgage rates are lower. This reduces your interest expenses. Similarly, cash-out amounts used for remodeling are tax deductible.
Unfortunately, you should be wary of the closing costs. The closing costs of cash-out refinancing are almost similar to the initial mortgage. While you may benefit from lower monthly payments, it extends your loan term, which may mean more interest payable.
Endnote
Installing a garage is a wise investment for any homeowner. However, financing the construction is a common hindrance. Fortunately, homeowners can take advantage of various easily accessible financing options. You should carefully consider these options to find one that fits your needs.
