5 options to help you pay for your home improvement dreams

Have you longed to renovate your bathroom, add an extension to your kitchen or turn the basement into a fully habitable living area? Then you aren’t alone. According to one survey, 76 percent of American’s would love to renovate their home, but there is one thing that is stopping them – money. Or to be more precise, lack of money.

Dream House - 5 options to help you pay for your home improvement dreams

Because home improvements don’t keep cheap. We won’t scare you with all the financials, but the average kitchen remodel costs $20,474, a new roof is slightly less at $20,000 and replacing your floor with brand new wood flooring will set you back around $4,400.

Sounds a nightmare, doesn’t it? Thankfully, there are quite a few options available to homeowners when it comes to finding ways to finance improvements and renovations. Here are five of them.

Credit cards
For small home improvement projects that aren’t going to run into five-figure sums, then credit cards can be a good option for financing the work that you wish to carry out. There are an increasing number of different cards available which can now offer various incentives to users, ranging from those offering 0 percent APR for a year – meaning you won’t be stung by interest rates as long as you can pay the debt off in timely fashion – to cards that can help you earn rewards or cash back valued at a few percentage points of the total you spend.


Obtaining a credit card can, of course, depend on your current credit score. If you’ve struggled with repayments on debt or credit in the past and are therefore worried about your chances of obtaining credit, then an unsecured credit card could help you gain access to the money needed to carry out your home improvement project.

Store credit cards
Rather than borrow credit from a bank, a store credit card offers you the option of opening a line of credit with a specific store, allowing you to buy goods from them now and pay later. They also offer incentives for you to sign up. The Lowe’s Store Card, for example, offers an unlimited 5 percent off all eligible purchases with Lowe’s, which can knock some serious money off your refurbishment if you buy everything you need from them.

The downside to store credit cards is that they can come with pretty high-interest rates – often more so than traditional credit cards. If you can pay the card off in a timely fashion, then this isn’t that much of a problem. If, however, you fall behind or unable to wipe out the debt relatively quickly, then you should consider other options. Store cards are not the sort of debt you want hanging over you for a long period.

Personal Loan
Many people are now turning to personal loans as their preferred way of borrowing, with this method becoming the fastest growing US consumer lending category in 2018 according to data from credit bureau TransUnion. It’s easy to see their appeal – they are often fast and easy to secure and can come from several different sources.
Among those offering loans are traditional banks and money lenders both in person or online. The contractors you employ to carry out the improvements may even offer a payment program spread over the following months which would constitute a type of loan, as could the stores from which you buy supplies.

Loans do often have higher fees and interest rates than credit cards, but they are easier to manage from a financial point of view – rather than having a minimum repayment that changes each month as you do with a credit card, you’ll be paying off a fixed amount every month which can help you with budgeting as you’ll always know exactly how much to set aside, avoiding the prospect of not having saved enough should that month’s repayment prove to be more than expected.

Home equity line of credit
Home equity line of credit (HELOC) is where you borrow money which is secured against your home. It gives you a revolving credit line with a very favorable interest rate compared to other forms of borrowing, due to the fact that if you end up being unable to pay, you could end up losing your home.

While there are other ways that you can gain access to money through using home ownership such as a full refinance or a second mortgage, a HELOC is generally easier to secure and requires far less paperwork. There is also the prospect of taking a tax reduction on the interest.

If you are planning on renovating your home in stages, then a HELOC is a good option. You only pay interest on what you’ve borrowed, so if you don’t use that line of credit, then there are no monthly repayments to make. You can also use a HELOC again and again, borrowing and paying off, borrowing and paying off. That allows you to concentrate on one area of the home, pay off the improvements to that and then move onto the next.

Title 1 Loan
Title 1 is a government program that can help to make home improvement loans more affordable for consumers by insuring lenders against losses on those loans. There are restrictions; the improvements must be light or moderate, and crucially, the loan cannot exceed certain amounts – for example, there is a limit of $25,000 on a single family residence.

The purpose of Title 1 is that it allows lenders to provide funding to homeowners who have minimal or no equity in their homes, so if the loan that you require would total more than you can offer through your house then it could be an ideal option for securing the financing you need for home improvements.

The Department of Housing and Urban Development can offer online help in finding a lender for Title 1 loans, although those going down this route should be aware that your remodeling or renovation must fit certain requirements in order for you to receive the funding. To know more, check this out for more information.

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