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For many people, paying for a home improvement project is a complicated process. To fund the home improvement project, you could take out a home equity loan, line of credit, or refinance your mortgage. You could also consider taking out a personal loan or simply choosing to save your money until you can afford the project.

The easiest and cheapest option would be to save and pay for the repairs. Secured loans are already guaranteed because of your home. The interest rates are lower than they would be with a credit card. However, the borrower can lose his home if the payments are now made. Securing a personal loan or using a credit card may be beneficial if the project is small and you do not have a lot of equity in your home. Perhaps you simply don’t feel like betting your home is a good idea.

Personal Loans

Personal loans are not secure according to your home. The interest rate on the personal loan is decided by your credit worthiness. These loans have fixed interest rates, which allows you to make reliable monthly payments that you can budget for. The payback period is shorter as well, as it is generally between two and five years. With an unsecured loan, the interest rate will be higher than getting a line of credit or loan. Choosing this type of loan also means that you will not be able to make a tax deduction claim, as if you were making mortgage payments. Your lender should inform you that the interest rate depends on your credit score, debt to income ratio, and credit history.

Credit Unions

Start looking for a personal loan at your local credit union. Credit unions have lower rates than lenders who are online, and want to help you receive the most affordable loan possible.


While credit is important, some online lenders may look at your education, profession, and income. Look around and check your interest rate. The larger the loan is, the more it would benefit you to look around. You can pay more in interest for a difference in the annual percentage rate. If you have good credit, you will have more lending options to choose from.


There are different government programs that can pay for home renovation. The Energy Efficient Mortgage program allows homeowners to finance part of their improvements, such as wall insulation, solar panel roofing and furnace duct repairs. The US Department of Housing and Urban development allows lenders to make home renovation loans without the need of home equity. The loan is insured by the Federal Housing Administration, and is based on your credit and the market rates.

Credit Cards

If you have good credit and the home improvement project is small, you may be able to receive a low interest credit card to cover the expenses. Try to pay off the card within the first year. If you are qualified to receive the credit card, you will not have to pay any interest charges. Do not overspend or use too much credit. If you do not have a great credit score, then you are better off trying to get a low interest secured loan.

Home equity loans are not as expensive as personal loans, so they remain a popular method for financing a home renovation. The loan could be a lump sum with a fixed interest rate or the rate could vary according to the market. Cash out financing may work if you refinance your mortgage into a higher loan amount and then use that to cover the costs of the project.