What's the Best Way to Finance My Home Improvement Projects?

Are the “zero percent interest” loans or credit card offers right for this?

Or should I apply for a new home loan, like a home equity loan or line of credit?

What’s the difference between all of these financing options?

You’ve probably received “you’ve been approved for a personal loan!”

Let’s take a look.

Use Cash If you’re free to

Cash is usually preferable to accumulating more debt.

Steer clear of shady offers,especially payday loans.

The Mortgage Professoroffers many calculatorsfor that tricky task.

A 15-year fixed home loan is currently 3.12%,according to WSJ.)

That low interest rate has a price, however.

You’ll also need to have enough equity in your home to qualify.

However, a cash-out refinance can be costly in the long run.

Also, you’ll owe more on your mortgage again, which is not fun at all.

Instead of 20 years left to pay, payments are now stretched over 30 years.

Home equity loans are a second mortgage on your home.

There might also be a pre-payment penalty if you pay off the loan early.

That makes it much more risky.

On the other hand, there are usually no closing costs on HELOCs.

Bankrate hasa calculatorto help you decide between a home equity loan or a home equity line of credit.

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