Financing for Home Improvement, Remodeling & Renovation

Financing for Home Improvement, Remodeling & Renovation can come in many different forms depending on a few fundamental things. For starters, you need to have an approximate idea of how much the entire project is going to cost. Then you need to take into consideration your credit rating, how much equity you may have in the house and just how much of your own money you have in hand. That being said, there are those of us who would rather not use the money we have saved up for Financing our Home Improvement, Remodeling & Renovation, in that case, these are the other options that may be available to you:

1. Home Equity Loan
This is where you borrow against the value of your house less the equity (amount of existing mortgage). You use your house as collateral and the amount borrowed as well as the interest rates are all fixed. This is particularly beneficial if you intend for the remodeling to be a one time affair. Furthermore, the interest paid on this sort of loan is tax deductible.

2. Your Credit card
Almost every homeowner has a credit card. If your remodelling or renovation is not going to cost too much, hopefully anywhere under a few thousand dollars, then you can simply put it all on your credit card. Although credit cards have a high interest rate, you will not have to pay any closing costs or loan fees. Be sure to only use this option if you are able to pay it off in a few months.

3. Your 401K
There are some 401K’s that allow you to borrow money that is to be used in your home remodeling or renovation. Here, the interest rates are usually very low and there are no fees to be paid. Best of all, you are pre-qualified for the loan. It is, however, advised against because should you leave your job, then you will be vulnerable to high penalty fees. Besides, you are eating into your retirement funds.

4. Unsecured Personal Loans
Long gone are the days when only banks could offer you unsecured personal loans. Nowadays, there are quite a number of private organizations that can do this. All you have to do is talk to your mortgage broker and they will have a list of all the borrowing facilities available to you. You need to be very alert as to the terms and conditions for most of these facilities may charge very high interest rates.

Whatever your financing choice is, be sure to read all the fine print. Hidden fees and clauses can be very costly.

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