Bathroom Remodel Financing

Pros and cons of bathroom remodel financing

When considering any large expense, you need to think hard about the positives and negatives. This is especially true for large home expenses like a bathroom remodel. With costs often exceeding $10,000 it’s important the right decision is made.

PROS

• Various Financing Options - You can choose from personal loans, HELOCs, credit cards, and more to finance these remodels.
• Increased Home Value - When you remodel any room in your house, the value will increase and it will be more attractive to buyers.
• Keep Your Savings - When financing, you do not need to pay upfront. This will allow you to keep your savings for emergencies.

CONS

• Price - As with any major home project, bathrooms are expensive. You need to make sure you can afford the costs before getting financing.
• Home as Collateral - Certain methods of financing require your home as collateral. This means if you default, you could lose your home.
• High Interest - If your finances are bad or you choose to use a credit card, you can be paying very high interest which will set you back even further.

What are the average costs for a bathroom remodel?

Like any other project, a huge factor in the cost of a bathroom remodel is where you live. It also depends on what you intend to do in the bathroom, for example just new fixtures or a complete rebuild.

The average cost of a bathroom remodel in the US is currently around $10,000.

The average cost includes everything from parts and appliances to labor. Below are the most common expenses of a bathroom remodel:

• Fixtures (like sinks and toilets) - $200 - $1,800
• Shower - $300 - $3,000
• Countertops - $200 - $1,000
• Lighting - $100 - $400
• Flooring - $200 - $1,300
• Painting - $150 - $550
• Plumbing - $250 - $1,450

As you can see, the ranges are very wide. If you choose to get basic fixtures and lighting, you could easily be on the low end of the estimates. However, if you decide you want top-of-the-line everything you will quickly find yourself at the top or even above those ranges.

What is the most expensive part of renovating a bathroom?

The prices for each different aspect of a bathroom remodel are listed in the section above. However, what usually costs the homeowner the most when remodeling a bathroom is actually the labor!

Labor usually costs anywhere from 40% - 65% of the total cost of the remodel. This is because you often need a few different specialists. You will need a plumber to work on your plumbing. You also need a contractor or specialists to install cabinetry, fixtures, lighting, paint, and more.

Be sure to research the labor well, as the prices they charge for the same job can be immensely different.

Is it a good idea to renovate a bathroom by yourself (DIY)?

If you know what you are doing, it is a great idea to remodel a bathroom yourself. As noted in the previous section, you would save 40%-65% of the total cost of your remodel due to the savings in labor.

You will still need to pay hundreds and maybe even thousands of dollars for materials, fixtures, and other supplies. Depending on your financial situation it may be worth it to still use financing to pay for all of these items.

If you are not 100% confident in your abilities, it makes more sense to hire a professional for your remodel. If anything is done incorrectly, you may need repairs, or worse case you may need to completely start over, resulting in even more money spent.

What credit score do I need to obtain bathroom remodel financing?

The fact is that people with a very low credit score will have trouble getting financing for anything. This also rings true for bathroom remodel financing.

If you decide to finance your remodel via a credit card that you already have, you could avoid the headache of applying and getting declined for loans. Just remember that this method is not recommended due to the intense financial strain it would put on you.

When it comes to personal loans, most lenders prefer that borrowers have above a 690 FICO score, but some lenders may make an exception to this.

For home equity financing, you will most likely need a score in the mid 600’s. While certain lenders may make an exception based on the rest of your finances, you will likely receive worse interest rates and other terms.

What type of ROI does a bathroom remodel give?

One of the main reasons homeowners decide to remodel their bathroom is the increase in the value of their home. While the numbers will vary greatly depending on the rest of your home and where you live, there are some average numbers that can help you make a decision.

For a middle of the range remodel, which could include new fixtures, showers, cabinets, and more - you will see an average ROI of 70.1%

For an upscale remodel, which would include top-of-the-line fixtures as well as potential structural changes and additions, the average ROI is 56.2%.

What is the best way to finance a bathroom remodel?

The most often recommended methods of financing a bathroom remodel are personal loans and HELOCs.

Each method has its positives and negatives, so be sure to research each thoroughly before choosing. In general, these methods are chosen because they will offer lower interest rates than other methods while still providing the necessary amount of money needed.

Credit cards are usually not recommended. The high-interest rates could put you into a financial situation that you do not want to be in, and leave you paying much more than your initial estimate.

How to apply for a bathroom renovation loan

1. Assess your renovation needs: Start by determining the scope and cost of your bathroom renovation project. Consider factors such as new fixtures, tiling, plumbing, or any structural changes required. Having a clear understanding of your renovation needs will help you determine the loan amount you should seek.
2. Research loan options: Explore various loan options available for bathroom renovations. Look beyond traditional personal loans and consider specialized home improvement loans or lines of credit specifically designed for renovation projects. Research lenders that offer competitive interest rates and flexible repayment terms.
3. Check your credit score: Your credit score plays a crucial role in obtaining favorable loan terms. Check your credit score and address any potential issues or discrepancies. Taking steps to improve your credit score, such as paying off outstanding debts or resolving errors, can increase your chances of securing a loan with better terms.
4. Gather necessary documentation: Prepare the required documentation to support your loan application. This may include proof of income, identification, recent bank statements, and any relevant renovation plans or contractor estimates. Having these documents ready in advance will streamline the application process.
5. Submit loan applications: Apply for loans with lenders that offer suitable terms for your bathroom renovation. Submit your loan applications with accurate and complete information. Consider applying with multiple lenders to compare offers and increase your chances of approval.
6. Review and compare loan offers: Once you receive loan offers, carefully review and compare the terms and conditions. Pay attention to interest rates, repayment periods, any associated fees, and penalties for early repayment. Select the loan offer that best fits your financial situation and renovation needs.
7. Accept and manage the loan: After accepting a loan offer, work closely with the lender to finalize the loan agreement. Understand the repayment schedule and ensure you can comfortably manage the monthly payments. Develop a budget to track expenses and allocate funds efficiently throughout the renovation process.
8. Begin your bathroom renovation: Once the loan is disbursed, use the funds to start your bathroom renovation project. Hire reputable contractors, purchase necessary materials, and closely monitor the progress to ensure the project stays on track.