Home Improvement is Great If You Know How to Finance It

With housing prices at an all time high, homeowners who have outgrown their existing home or feel that it no longer meets their needs have a dilemma. It would be great to move to a larger house, but the prices of larger houses are higher than ever. What to do? The savvy homeowner might consider remodeling. You can add an extra room, convert a garage or update a kitchen. It's less expensive than buying another house, and there are many options for funding it.

Here are a few ways to obtain funds for home improvement purposes:

Credit cards - If you have received a recent offer for a low-interest or 0% interest "teaser" rate for applying for a new credit card, this may be your ticket. These offers are usually good for balance transfers from other accounts, and the rates are sometimes good for the life of the loan. This could be the best choice if you are doing the improvements yourself. Be sure to read the fine print, or that 0% interest could turn out to be 20% or more.

Home improvement stores - Sometimes, lumberyards and home improvement stores offer their own financing and the deals are often pretty enticing. Sometimes they even include no payments for a year or so. Check the ads in your local newspaper. Again, this option works best if you are doing your own work. And make sure you pay on time; sometimes the interest accrues retroactively if you pay late.

Home equity loan - The interest is tax deductible and you will have a fixed interest rate and a fixed repayment schedule. This is a great way to go if the project is expensive and is being done all at once. Be aware that you are putting your house at risk if you fail to pay. This is the best option for major renovations performed by a contractor.

Home equity line of credit - Great for long-term projects that just require a little bit of money here and there. The interest rate is variable and you only have to pay back what you actually use. The interest is still tax deductible. You are, as with a home equity loan, pledging your house as collateral.

With the price of houses still near all time highs, this is perhaps the best time ever to consider staying in your home and fixing it up. You can make it more suit your needs and you don't have to move. And with numerous financing options available, funding should be available for just about anyone who wants to make their home just a little bit more livable.

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