6 Personal Loans to Finance Your Bathroom Remodel

How much does a bathroom remodel cost? The average cost for a midrange bathroom remodel

How much does a bathroom remodel cost?

The average cost for a midrange bathroom remodel is $21,377, according to Remodeling magazine’s 2020 Cost vs. Value report. A more extensive “upscale” project costs an average of $67,106.

Personal loans for bathroom remodels

  • Borrowers with good to excellent credit get the lowest rates. Annual percentage rates on personal loans range from 6% to 36%. The rate you receive depends primarily on your creditworthiness and financial situation. Borrowers with high credit scores (above 689 on the FICO scale) and low debt get the best rates.

  • Funding is fast. Some online lenders can fund your loan within a day or two. Having the required documents available — including proof of income like pay stubs and bank statements — can speed the process.

  • You get the money in one lump sum. You should have a solid estimate of your project’s cost to ensure you apply for the right loan amount. Loan amounts on personal loans range from $1,000 to $100,000.

  • You don’t use your home to secure the loan. Unlike a home equity loan or line of credit, personal loans are unsecured and don’t require you to put up your home as collateral.

  • You repay in fixed installments. Most personal loans have fixed interest rates, which means your repayments are the same for the duration of the loan, and you can budget accordingly.

How to get a personal loan for a bathroom remodeling project

Once you know how much you’ll need, follow these steps to get a bathroom remodel loan:

  • Calculate your payments. A personal loan calculator tells you how much your monthly payments will be, based on your rate, repayment terms and loan amount.

  • Adjust your budget. If you don’t already have a personal budget, building one will help you make room for monthly payments toward your loan.

  • Pre-qualify. Lenders that let you pre-qualify show you potential rates and terms on your personal loan. You can pre-qualify with NerdWallet to compare offers from multiple online lenders at once.

Other bathroom remodel financing options

Home equity

Cash-out refinancing, home equity loans and lines of credit tend to be better options for larger, more extensive projects. They all require you to use your home as collateral to get the funds, meaning the lender can take your home if you can’t repay.

Rates tend to be lower on home equity loans and lines of credit than on personal loans, but it can take a few weeks to get your funds.

If you use your home equity to finance a home improvement project, you may be eligible for tax benefits.

Home equity lines of credit (HELOCs): If you’re approved for a HELOC, you’ll get access to some amount of your home equity that you can use during your draw period, which usually lasts around 10 years. Then, you’ll repay the loan at a variable interest rate during the repayment period. These are best for ongoing projects, where you can make the most of a long draw period.

Home equity loans: Home equity loans give you a fixed amount of money that you repay in fixed monthly installments. With this option, you begin repaying the loan and rebuilding equity immediately. These are best when you know how much you’ll need for the bathroom upgrades, with few surprises throughout the process.

Cash-out refinance: If mortgage rates are lower than they were when you first got your mortgage, a cash-out refinance will get you a lower rate on the mortgage. This option is best for larger, more expensive projects that balance the effort and cost of an appraisal, closing costs and other fees.

Government programs

FHA Title I loans can be used for remodels and repairs of homes that haven’t earned equity. To qualify, the home improvement has to improve the livability and usefulness of the home, according to the Department of Housing and Urban Development.

Credit cards

Credit cards can cover smaller projects — like DIY remodels, for example — and get you rewards on frequent trips to the hardware or furniture store.

Credit cards typically have higher interest rates than personal loans and home equity loans. Used strategically, they can work for home improvement projects.

0% APR credit cards: These cards have promotional periods — usually 12 to 18 months — when you can use them without incurring any interest. These cards tend to go to consumers with good or excellent credit. Consider the card’s regular APR, because if you can’t pay the balance by the end of the promotion, you’ll pay interest at that rate.

Store and rewards cards: Putting furnishings or hardware purchases on a store or rewards card can get you perks like cash back. Try to pay off your balance each month to avoid letting interest accrue and outweigh the benefits.

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