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How to Finance a Home Improvement Project

Learn more about how to finance a home improvement project.

Home remodeling projects are not cheap. If you get a quote for your project that seems low, trust me, it’s probably too good to be true. It typically means the company is using low-quality materials, unskilled labor, or have no written warranties to back up their work. In all my years of working in home remodeling, I’ve never seen a happy customer who also got it “cheap.” I know the old saying is cliche, but you do get what you pay for. Especially when it comes to improving your home. If you’re like most customers, you don’t want cheap. You want a reliable company, high-quality products backed by an extensive warranty, and professional installation. Knowing the project will likely be costly, how are you going to finance a home improvement project?

Your financing options

For any home improvement project you typically, and luckily, have a few options to pay for it. Most homeowners in the U.S. don’t have more than a couple thousand dollars in their savings. So how do the majority of homeowners afford a project that costs more than what they have in savings? Well, you can either ask your bank or the company you’re doing business, but we suggest you do both. We encourage you to know if you’re getting the best rate. Based on our experience, we’ve outlined a typical scenario that we commonly see in today’s market.

Loan options with your bank

Most banks only have a few things to offer for a project like this. First, you can check to see if your home has any equity and see if they might offer a line of credit on that equity. Usually, these home equity lines of credit (HELOC) will offer you the lowest rates, typically between 3-9%. However, keep in mind there are closing costs associated with implementing the loan. And your home will be “on the line” if you can’t pay the loan on their terms. If a HELOC is not an option for you, banks may offer you an unsecured personal loan for your project, similar to a credit card. Like a credit card, these interest rates will be much higher than a line of credit, typically ranging between 9-17%.

Loan options with a home remodeling company

Most company’s you will do business with offer financing options from a financial partner, their preferred lending partner. Most home remodeling companies partner with the same three to five banks so its likely you’ll see similar financing options. For example, our most popular plan is our Liberty Plan. This plan has a fixed rate of 9.99% interest, a low monthly payment factor of only 1.25%, and no early payment penalty. What exactly does this mean, though?

Let’s say you decide to replace the windows on your home and the project is going to cost $10,000. If you financed it through our Liberty Plan, you would have a minimum monthly payment of $125 since the monthly payment factor is 1.25% of the amount being financed. The amazing thing about this plan is that you have the flexibility to pay either the minimum of $125 every month. Or you can pay the entire balance of the loan whenever you wish since there are no early payment penalties. Our customers love this plan and choose it most often because it has flexibility, a lower interest rate, and a smaller monthly payment. All of these options are typically better than an unsecured personal loan you can get from your bank.

Make the right choice

Now that you have some insight as to what options you have to finance your home remodeling project, you can make a more confident and informed decision. Whether you’re choosing a loan from your own bank or the plans offered by your home remodeling company, you have a lot of great options to afford your home improvement project. Learn more about the financing options we offer.

As always, if you have any questions at all or would like one of our experts to help you decide on a plan that’s best you and your budget please contact us. We are happy to help!


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