Home improvement is the process of renovating, remodeling or making additions to a home. It includes anything from painting and installing a new front door to upgrading or repairing the kitchen or bathroom.
Home improvement can be done for various reasons, including safety, maintenance or personal preference. Depending on the type of project, you can apply for a loan or credit card to help pay for it.
For those looking to improve their homes, the best way to finance the project is to use a home equity line of credit. This allows you to borrow as much money as you need for the project, up to 85% of the value of your home. However, you will be required to have at least 20% of your home’s equity.
If you have good to excellent credit, a personal loan may be more affordable and flexible. Unlike a home equity loan, a personal loan has no collateral requirements and is based on a fixed monthly payment.
Another option is to refinance your mortgage. By taking out a second mortgage, you can access extra cash for your home renovation.
You may also qualify for a 0% APR credit card. Some offer an introductory period of 15 to 21 months, during which you do not have to make any interest payments. But the drawback is that the interest rate is generally higher than a personal loan.
While a home equity loan can be a good option for a major project, it is not always the best choice. Home improvements can increase the value of your home, but they can also detract from its resale value.