An updated kitchen can significantly add to the value of your home. Unfortunately, few homeowners have the cash reserves needed to pay for a complete kitchen remodel in full. Instead, homeowners will often choose to finance these projects using unique financial products.
Learn about the most popular ways to finance a kitchen remodel so that you will be able to determine which option will best meet your financial needs over time.
1. Home Equity Loan
A home equity loan can be a valuable tool when you are trying to come up with the money you will need to remodel your kitchen. Home equity loans are tied to the value of your property.
The difference between the amount of money owed on your mortgage and the current value of the property is referred to as equity. You can take out a second mortgage for the value of the equity to help pay for your kitchen remodel.
Home equity loans typically have softer credit and income requirements because they are secured by your home. The repayment period for a home equity loan tends to be longer than other loans, which allows you to spread the cost of your kitchen remodel over time.
2. Home Equity Line of Credit
A home equity line of credit is similar to a home equity loan. The primary difference is that you are not given the value of the equity in your home in a lump sum with a line of credit. Instead, you are issued a credit card that will deduct from this equity for a set number of years.
Some homeowners prefer to use a home equity line of credit instead of a loan because it minimizes the amount of equity that is utilized. You will only repay the amount debited from the line of credit, not the entire equity amount when you choose to go this route.
Having a home equity line of credit can also give you the option to use your equity for other home improvement projects.
3. Personal Loan
A personal loan is a good financing option for homeowners who don't have a lot of equity built into their homes.
Personal loans are issued based on creditworthiness and income, so they can be a little more challenging to qualify for than their home equity counterparts.
Your home will not be used as collateral for a personal loan, so your ability to repay will have no impact on your ownership status over time. Reach out to kitchen remodel financing services to learn more.
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