Whether you hire a professional or you’re handy enough to DIY, home improvement projects can cost a pretty penny. While paying in cash is always a smarter financial choice, most of us have to take out a loan to pay for significant projects like adding a swimming pool, building a deck, or upgrading a bathroom. If you pay attention to your mail and email, you’ve probably received news that “You’ve been prequalified for a personal loan!” A personal loan or Home Improvement Loan could be the right financial solution to help your home improvement dreams come true. As with any big financial consideration, you should always scope out other options and do some research to see what makes the most sense for you and your budget.

Home Improvement Funding Options

Paying in Cash
Cash is always a better choice than running up debt on large expenses like home improvement projects. But, let’s face it—it’s not always a reality for everyone. Maybe you can set aside some cash and build a small nest egg for smaller home improvement projects like painting, replacing flooring, or installing a new front door, while large improvements might require a little financial help.

Using Credit Cards
Swiping a credit card to pay for a home improvement project might be tempting and easy if you already have one with available credit, but before you choose to use a credit card be sure to know the associated costs like interest rates and fees. A credit card that offers a 0% introductory rate could be a good choice for funding a smaller project if you can repay the balance during the promotional period, and there could also be some added benefits if your credit card offers cash back rewards or points programs, but make sure you can pay what you borrow at a low cost — otherwise, your home improvement could cause you debt that takes a long time to pay off. In addition, using multiple cards to pay for home improvements could make your monthly bill-paying routine a bit more chaotic. Another important consideration is that if you’re hiring help, a credit card might not be an acceptable form of payment.

Borrowing from a Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit (HELOC) is a revolving loan that you can borrow against the equity you have in your home. If you don’t have equity, this unfortunately isn’t an option you can consider.

If you choose a HELOC proceed with caution, as your home will be used as collateral on the loan. If you can’t repay the loan you’ll lose your home to foreclosure, which would be devastating for you and your family.
With a HELOC the cost of borrowing could change at any moment, as the interest rate is typically variable like a credit card. There could also be additional fees to consider since a HELOC is a lot like taking out a mortgage. If your home improvement is something urgent, like replacing electrical wiring or a leaky roof, then time is of the essence and a HELOC loan could take a long while to get approved.

Cash-out refinance
If you own your home, another thing you could do is look into a cash-out refinance. This option would allow you to take out a larger mortgage when you refinance so you can use the extra cash to pay for your home renovation.
For example, let’s say your home is worth $200,000 and you owe $100,000 on the mortgage at a high-interest rate. You could potentially refinance at a lower rate and borrow $120,000 — using the extra $20,000 to pay for your new modern-day kitchen.

Home Improvement Loans

According to Credit Karma, a personal loan could be a good fit for funding projects that cost anywhere from $15,000 to $50,000. That’s because home improvement loans are generally easy to apply for, tend to offer higher loan amounts than credit cards, and don’t use your home as collateral.

A Home Improvement Loan can give you fast access to money so you can turn your home improvement dreams into a reality. A really nice perk of using a personal loan is that you’ll have a fixed interest rate and repayment plan so you’ll know exactly how long it will take you to pay off the loan — sounds easy right?

The Benefits of Home Improvement Loans

While you can use a personal loan for just about anything, there are a few reasons why a home improvement loan can be a smarter choice than borrowing against your home or using a credit card.

A Home Improvement Loan Could…

Save You Money
Depending on your credit score, your debt-to-income ratio, and other factors like income, you may qualify for a low-interest rate personal loan. Personal loans have fixed interest rates, so they won’t fluctuate like a variable rate credit card or HELOC. Another thing to consider is that borrowing against the equity in your home is often treated as a mortgage and can come with additional fees, closing costs, and appraisal costs.

Give you Free Time to Enjoy Life
Applying for a personal loan is pretty simple; there are usually just a few steps to complete and a quick turn-around time for funding. Some lenders can have funds deposited into your bank account in as little as one day. With a HELOC or cash-out refinance, you can only borrow against the equity you have in your home. If you’re a new homeowner, that may not be much, and the paperwork required for loans that use your home as collateral makes it a lengthy approval process. A personal loan gives you the freedom to get started on your home improvement project right away so you can get back to enjoying your life.

Provide Security and Peace of Mind
A home renovation loan is an unsecured personal loan that doesn’t require you to use your home as collateral. When you borrow against the value of your home, you’re putting your home on the line if you discover that you can’t make your monthly payments.

Should I use a Personal Loan to pay for my Home Improvement Project?
Every homeowner needs to make an improvement to their home at some point in life. A personal loan could help make any type of home ownership expense possible without the stress of worrying about how to pay for it.
A personal loan may also be the right solution for new homeowners who don’t have a lot of equity in their home, people who live in lower home value markets, and anyone who appreciates an easy application process and fast funding.
Whatever improvements your home needs, be sure to shop around for the best lender that will meet your financial needs so you can start making improvements with security and peace of mind.

How to Get a Home Improvement Loan

Taking pride in your home improves the quality of life of you and your family, and small or large improvements here and there can also increase the value of your home — a smart financial decision to make. With a little financial help from a home improvement loan, you could be taking a dip in your new swimming pool or entertaining guests on your new patio in no time.

Depending on the lender, getting a home improvement loan can be as easy as 1-2-3.

  1. Read online reviews, learn about what you can expect, and see what you can fit into your budget.
  2. Gather your financial information and apply online hassle-free.
  3. Get approved—sometimes in just a few minutes.