How to Finance (Ideas & Loan) Your Home Remodeling Project?

Do you have huge plans of remodeling your kitchen or working on a garden improvement project but don’t know how to finance it? Well, as a consumer there are many financing options that you need to evaluate before you make your final choice in these matters. These decisions will have to be made, irrespective of whether you choose to hire a contractor or do it yourself.

The main things that would influence your source of finance would be the amount of expenditure you are willing to incur and the total time involved in the completion of the project. The following financing options are available for your evaluation for your exciting home remodeling project –

Bring The Credit Card To Your Rescue – It is right that the interest rates on credit card are exorbitant when compared to other options but if it’s a small job, then credit cards are the easiest to handle. A few hundred dollars paid using your card won’t hurt you as much as all the paperwork and formalities associated with the other options will. What you need to remember is as the interest is high & not tax deductible, only use this option when the amount involved is small and payback as soon as possible.

Tap Into Your Home Equity – The best part about this option is the deductible interest rate that is minimal in its charge. Home equity is a resource you can tap on efficiently because it doesn’t yield much until you are selling your home away. This type of loan is easier to get when the work is being done on a larger scale using the help of professionals or experts. This is because of the safety factor the lender banks on when you have hired a contractor as the quality of the work becomes unquestionable.

Take A Home Equity Loan – This kind of loan is feasible when you are going to take and expend the loan in a single shot and will pay it back when you finish the project. It is good to use this option when you have employed a contractor who can give you correct estimates about your expenditure. [Read more about how to select the right home equity loan]

Choose HELOC For An Advantage – HELOC or Home Equity Line Of Credit is the best choice for an open ended project, especially when it is a do-it-yourself thing you have planned to work on. This option leaves a lot of scope for expenses that could not be foreseen while making estimates. It basically lets you withdraw small loan amounts and have a maximum ceiling limit. It is cheaper because the interest accrues accordingly.

401 (K) Is Another Option You Could Try – Some employer retirement plans are restrictive about borrowing for particular home improvement projects but if your 401 (K) plan isn’t one of those, it will be easier to go for this option than any other. The rates are fairly low and checks are minimal but it involves non-payment penalties of about 30%. However, the thing of the biggest concern is that experts believe that they burn a hole into your retirement funds, even if you pay back the entire amount.

The best option is to always wait till you have enough cash and then undertake the project. However, there are other options like Title 1 loan, Portfolio borrowing and Life Insurance loan which are an option if you plan on borrowing a huge amount.

About author : B. Lyttle is a finance expert with over 5 years of experience and specialization in home loans and credit report issues.

Vijayraj Reddy
Vijayraj Reddy is founder & editor-in-chief of, a financial blog which helps people to earn money, invest money and save money. You can find him on Facebook & Twitter or send him email at [email protected]

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One Response to “How to Finance (Ideas & Loan) Your Home Remodeling Project?”

  1. Rudy Fernandez says:

    Before committing yourself on a project especially on your own house it is a must to make sure your budget is ready and all the necessary documentations and stuffs needed are on the right place and ready to use.

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