3 Ways to Save on Home Renovations When Borrowing Costs Are Up

At its most recent meeting, the Federal Reserve decided to hit pause on its interest rate hikes after 10 consecutive increases since March 2022. And that's something many consumers are no doubt grateful for, since interest rate hikes have already driven the cost of borrowing up to a notable degree.

These days, you may be looking at a higher interest rate on a personal loan or home equity loan than you would've faced in the past. This holds true even if your credit score is great. That means that if you're looking to finance a home renovation, it might cost you a bundle.

That's why it pays to keep the cost of your upcoming home improvement project as low as possible. The less you have to spend, the less you have to borrow. Here are a few ways to trim your costs.

1. Do the work yourself if you can

The cost of materials for your home renovation is something you'll need to bear no matter what. If you're putting in hardwood floors, for example, you're going to spend money on those materials.

But a big expense you'll commonly face when doing home improvements is labor. So if you're able to eliminate that cost by doing the work yourself, you may not need to take out as large a personal or home equity loan to finance your project.

However, if you're going to go the DIY route, make sure you're really equipped to do the job. You don't want to compromise your home or your personal safety just to save some money.

Besides, think about it this way -- if you end up with a $1,000 hospital bill to avoid paying a contractor $500, you won't even come out ahead financially. And you'll be injured.

2. Book your contractors off season

Contractors who do outdoor projects, like building decks and fences, tend to be busier during the warm weather months, since that's when people tend to have these renovations on their minds. If you book a contractor during their off season, you may find that you're looking at a smaller tab. So rather than hire someone to build you a deck in July, wait until the fall, when the weather is cooling, and have the job done then.

3. Be flexible with your timing

Once your contractor starts a project of yours, you may want it finished as quickly as possible. But if you're able and willing to be flexible with your project's completion date, your contractor might offer a discount in exchange. That's because your flexibility might allow them to take on extra, more lucrative side work while tackling an ongoing job of yours.

So, let's say you're having your basement finished and it would normally be an eight-week job. If you agree to give your contractor 16 weeks to complete the work, they might offer up a discount in exchange.

Home renovations can be expensive to finance even when borrowing costs aren't so high. But given the interest rates borrowers are looking at today, it pays to do what you can to keep the cost of your home improvements down.