Home Improvement Financing

Financing your Home Improvement Poject

Home improvement financing is a great way to get your house to look like new again, without going broke. Many remodeling costs fall out of average budgets, but home owners now have a plethora of options which allow them to consider these projects. Home improvement financing mainly involves home improvement loans, home equity loans, home equity line of credit, mortgage refinancing amongst other options. Many flexible options are available, and the use of the growing equity in your home is rapidly becoming popular. Home improvement financing needs to be a smart and calculated decision and this involves research and smart thinking.

From low interest rates to tax deductions, home improvement loans offer a number of benefits over credit cards. But for small projects which do not cost over a few hundred dollars, the credit card would be a better option, as you can avoid the paper work and other upfront costs which many home improvement loans entail. In case of bigger projects, home equity loans or home equity lines of credit are a good option. They make use of the equity in your home, without you actually having to sell your house. All interest payments on a home equity loan are tax deductible, making them doubly attractive.

But home equity refinancing is not the only way, you can also take up mortgage refinancing, in which you get to replace your original mortgage with a new, larger mortgage, which is inclusive of your equity. If opting for HELOCs then you need to know that they are best suited for long term projects where unexpected costs are likely to crop up. HELOCs are similar to credit cards, wherein you only pay for what you withdraw, making it relatively easier and more flexible.

Some employers allow tapping into the retirement fund, but even though this includes no credit checks and low rates, this step should be taken only after you have considered all other possibilities. Another similar option is borrowing on the cash value of your life insurance. Typically you can borrow as much as 96% of your policy's cash value. There are no credit checks on this option and you can get some really low rates, but you do lessen your death benefits by taking up this option. Apart from all these, you can also borrow against your portfolio, wherein you use your securities as collateral. Avoid borrowing over 50% in this case, as this is a safe figure considering the volatile nature of the market.

There are many other options that you as a home owner can opt for, but you need to make these decisions after you have researched all your options. You need to have a clear plan in mind, and an approximate home improvement cost. Based on this cost you will decide on your home improvement financing options. Many loans may seem extremely attractive, but be sure you are aware of all associated costs and future commitments before making a decision. Home improvement of any size could be within you grasp, with the right home improvement financing.

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