Home renovations are expensive. Want a new kitchen? That could set you back $25,000. New bathroom? That’ll be $10,000 on average. While it’d be nice to pay out of pocket for these costs, that’s not possible for most people. In this article we’ll talk about the different financial tools you can use to finance your home improvement projects.

If You Have Cash

You might be someone who has cash on hand to be able to pay for home improvements without using credit. While avoiding debt is often a positive thing, in this case you might benefit from a strategy involving a credit card. If you use a cash back credit card, and pay it off before being charged any interest, you’ll effectively receive a discount on the cost of the project in the form of cash back you receive.

Home Equity Line of Credit (HELOC)

HELOCs are one of the two main products that you can use to use the equity of your home to pay for home improvement projects. They are a revolving source of funds, similar to a credit card that you can access as you choose.

Secured or Unsecured: Secured, collateralized by home

Interest rates: Variable interest. Typically, lower than personal loan, credit card.

Availability of funds: Longer time to fund due to appraisal, title search etc.

Timeline: Pay as you go, like a credit card during the “draw period” which is normally around 10-15 years, then remaining balance is converted to a regular payment schedule during the “repayment period” which often lasts between 10-15 years.   HELOCs at WECU, on the other hand, come with fully amortized payments from the get-go. They are adjusted with rate changes and advances.

Best for: Longer term financial planning. Safety net, home improvement access, education, etc.

Fees: Depend on lender but can include appraisal property valuation fee, title, and recording fees.

Cash-Out Refinance

Another option might be to tap into the equity of your home. A cash-out refinance could provide you with the cash you need to pay for the improvements without paying any money out of pocket. It is important to consider the cost of the refinance to determine whether this option makes sense in the long run.