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Find your own way to finance your home improvement costs By Justin Hunter

Now’s the time to do that major home improvement project you have been putting off for the last few months or years. There are a number of reasons why someone would want or need to tackle a major home improvement project and it almost always adds value to your home.

But significantly improving your home takes more than a couple nails and screws. If you are going to add a new room, open a room by knocking down a wall or renovate the kitchen, etc. you should not hold back on the expenses because the more you put into it, the more you will get out of it. And besides, you may never get around to make any more improvements the rest of the time you are in the house.

Therefore, your project may be expensive. Just remember, you are the one conducting the product and you are the one paying for it. The article, “Home Improvement Finance 101,” written by Broderick Perkins and posted on Realty Times, explains the various home improvement financing options you have.

Before discussing which financing options will best suit your situation, you need to first know that financing through your contractor is probably in their best interest but not yours.

“A loan from the contractor could be financed through lenders offering commissions to the contractor, commissions you could end up paying in the form of financing or originating costs, interest rates or other fees. That could also mean the cash is in your contractor's pocket before the work even starts. If the work isn't up to par, you're up the creek with no money to leverage corrections.”

Financing through your contractor usually leads to you spending more on a project as well because the contractor will add upgrades, etc. that he or she will just tack on to the final costs.

Pay your contractor through your own financial means via monthly payments if you have to. You should also go online to find typical contractor fees in your neighborhood to avoid overpaying.

So how do you come up with the necessary finances to pay your contractor for the costly project?

“Market researcher Informa Research Services suggests Home Equity Lines of Credit (HELOC) as a good starting point because rates are cheaper than many credit cards, personal loans and second mortgages.”

Credit cards with low or even zero introductory interest rates may be a viable option for smaller projects but stay away from them with more expensive projects because chances are you will not be able to pay off the entire amount within the introductory period, and will thus end up paying much more in back charges.

But homeowners, who like the option of having a credit line to perhaps hire and pay multiple contractors for separate projects during the same time, should probably take out a fixed-rate second mortgage or a cash-out refinance.

“Like HELOCs they are tax deductible, but with a fixed rate you remove the potential for cost melt down, something that could also happen with a HELOC, should the rate rise during a long project or one that lingers unexpectedly.”

“Advises Informa: ‘It's best to always pay close attention to the most current rates and choose the finance method which fits your needs the best.’”

You are in charge of your home and the improvements that are made to it, so make sure you are also in control of how you pay for it. A second mortgage or HELOC are your best home improvement financing options.

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