Choosing the Right Source to Fund Your Project
Sometimes things don't turn out exactly how you plan them. For instance, you arrange to take a week over from work to work at home on a DIY project and now as the time closes in you are short a bit on funds. There are many types of loans available that you can apply for and use to finish your project while you have the time off.
Make sure you have room in your budget for another payment
Before taking out a credit line from your bank or another lender it's important to make sure that you have the means to make the payments on time. Make a list of your bills and all of your other monthly expenses like gas, food, school and basic essentials. Then subtract this figure from your obligations to see what type of payment you can comfortably afford. Getting in over your head and committing to something that's just not doable will hurt you more than completing your project on time.
Types of loans available
There are two types of loans offered by banks and lending companies, secured and unsecured. The secured have collateral attached to them such as a mortgage and a car loan. They most times are easier to acquire simply because the lender has a way of recovering its losses by reclaiming the property. Unsecured lines of credit like personal loans, student loans, short-term loans and credit cards are generally a bit harder. Most of these loans use your credit report to view your score, payment history, recent applications and to acquire your debt to income ratio. If your score and your debt-to-income ratio are within the desirable range, getting an approval is something you can achieve.
Which loan is best for you
If you have an existing mortgage in good standing, probably the easiest way to acquire a loan would be to contact the lender that has the mortgage to see what options are available to you. You may be able to refinance your mortgage or take out a Home Equity Line of Credit (HELOC). This, of course, will depend on how much equity you have in your loan. If you recently acquired a mortgage say less than 5 years ago, chances are good that you won't have any amount paid off. However, if you put the full 20% down when you acquired your mortgage a HELOC might work. If neither of these two prospects works out, you can still apply for a personal loan. Since you have a mortgage the bank would have a way to recover its losses if you default. If your bank turns you down you still have another option and that is to apply for a short-term loan. Many online companies provide these loans to people who make the money but don't have a savings established to cover extra expenses. Of course, the best way to fund any project is through saved monies.
Establishing a savings account
Many people who have a good job still don't see the importance of having a savings account. But like happens and while you don't expect to lose your job anything is possible. By opening a savings account and depositing a set amount of money weekly or bi-weekly, you'll have monies set aside to fund your projects, you pay for repairs and to cover your expenses should you lose your job.
Creating a budget and paying down debt
A budget is essential to running your household efficiently. It's a way for you to stay on top of your expenses. If you don't currently have one in place, now's a great time to get started. Create a spreadsheet and list all your monthly obligations like your mortgage, car payment and loans, along with you utilities, cable and cell phone. Then add in an estimated amount for other monthly expenses like gas, food and essential supplies. When you run your household off of a budget you make better choices regarding unneeded expenses. When you have this put together, check areas where you can reduce or eliminate the bill entirely. For example, if you have five credit cards, works towards paying the one off with the highest interest. For your cable and cell phone, shop around to see if a better plan is available. These changes will help to free up monies quickly and help to reduce your debt.