Strategies to Pay for Home Improvements


You may be interested in embarking on home improvements. As a result, you have a primary task of determining how you will pay for your home improvement efforts. There are a number of different ways in which you can pay for home improvements. You do need to keep in mind that not all of these strategies are suitable for your situation. In addition, some of these suggested methods for payment have more favorable financial ramifications than do others.

Home Equity Loan

A home equity loan is a type of second mortgage. You apply for a certain amount of money and if approved are provided that money from the lender. Thus, you need to have a fairly solid budget in mind so that you know the amount of a loan you need to seek,

A positive element of a home equity loan is that there can be some tax benefits. In addition, the paperwork associated with this type of loan is not all that significant. A downside to this type of loan is that a home equity loan may have a higher interest rate than refinancing.

Refinancing a Home Mortgage Loan

If you are planning major home improvements, a refinancing your home mortgage loan may be the best course for you to take. With a larger home improvement project, you are likely to require more money. If you have a decent amount of equity in your residence, you can pull that out for your project and refinance.

On the positive side of the ledger, in addition to getting the money you need for home improvements, you may also be able to negotiate a better interest rate on a refi.

A negative aspect of refinancing is that it requires a good amount of paperwork and there will be some upfront costs associated with a refi loan.

Home Equity Line of Credit

A common method of paying for home improvements is a home equity line of credit. Through a home equity line of credit, you are able to borrow money up to a certain amount, with your home as collateral. You can draw from the line of credit as a home improvement project moves onward and you don't have to use all of the credit available to you.

On the plus side, the interest rate on a home equity loan is usually fairly decent. On the con side, your home is collateral for the loan. If you default on a home equity line of credit, you run the risk of facing a foreclosure on your residence.

Major Credit Cards

If you are planning a smaller home improvement project, you might want to consider using major credit cards to assist in paying for the endeavor. This is particularly the case if you have a new credit card that is offering an introductory offer along the lines of zero percent interest.

The benefit of taking this course is that there is no paperwork work or approval process needed because of this an existing line of credit. The negative side of a credit card is that interest rates can add up over time or kick-in if you have some sort of initial introductory offer.

Life Insurance

If you have a cash value life insurance policy, you likely have the ability to borrow on your policy. You can borrow up the life insurance policy's current cash value.

A benefit of borrowing from your life insurance policy's cash value is that there is no set schedule for repayment. Conversely, a negative aspect is there can be some negative tax consequences.

Personal Loan

A personal loan is an unsecured loan that can be obtained from a variety of different sources, including a brick and mortar world bank as well as an online lending source. You will need to have solid credit in order to obtain a personal loan.

A positive aspect of a personal loan is that you are likely to obtain a fairly fast approval if you do quality. Negatively, you will have a higher interest rate on a personal loan that is the case with some other financing options that are available to you when it comes to paying for home improvements.


A basic way you can pay for home improvements is to use cash, assuming you have it available to you. Cash is the "cheapest" way to pay for home improvements when contrasted with different financing options. In addition, it allows you to better control what you spend if you are limiting improvements to what you have the money on hand to fund.


Jessica Kane is a professional blogger who focuses on personal finance and other money matters. She currently writes for, where you can get personal checks and business checks.

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