Home improvement loans: Loan to remodel your house

Whether you're considering remodeling your home because you want to update it or because you need to make some necessary repairs, it's essential to do your research to make the best decisions for your family and your budget.

This guide gives you a basic overview of the different types of loans available for home remodeling, as well as some tips on choosing the right style for your project.

Remember that this is just a starting point — consult with a financial advisor and a contractor before making any final decisions.

Home equity loan for remodeling your home

Taking out a home equity loan for a remodel is one way to make your renovation projects more financially attainable.

With a home equity loan, you use the value of the equity in your home to secure a lump sum loan amount. Because they are secured loans, there is usually a lower interest rate than there would be with other consumer loans, like personal loans.

You can then use this equity to finance both large and small renovations, like adding an extra room or remodeling your kitchen counters and cabinets.

Home remodel financing: Other loans for remodeling homes

Aside from a home equity loan, there are various ways to finance your home improvement project.

Cash out refinance for home remodeling

A cash out refinance is when you take out a new mortgage that pays off your existing mortgage while providing additional funds for the remodel. You can use the extra money for any purpose, including home improvements or repairs. This type of loan allows you to tap into the equity in your home to obtain funds for renovations or repairs.

If you want to see how much cash you may be able to get out of your home, you can use the cash out refinance calculator from Discover® Home Loans.

HELOC for your home remodel

A HELOC is a form of credit that utilizes the equity in your house. With a HELOC, you are given a line of credit that allows you to borrow up to your limit and could use the money for anything, including remodeling costs.

HELOCs usually come with a variable interest rate which means your interest charge could change depending on market conditions. Please note: Discover Home Loans offers a home equity loan product, but does not offer HELOCs.

Credit card for home remodel financing

Using a credit card can be easy for financing small remodeling projects without taking out a big loan or dealing with complicated paperwork or processes.

However, using plastic has some differences—most notably, high-interest rates and potential fees if late or missed altogether. Additionally, many cards come with limits on how much you can charge per transaction, which may make it difficult if you're looking to purchase large items like furniture or appliances.

When researching your options, you might consider seeing if a credit card from Discover offers the benefits and features you’re looking for.

Personal loan for home remodel

Like a credit card, personal loans provide access to funds quickly and easily without going through lengthy processes like refinancing or taking out another type of secured loan against your home equity. Personal loans usually come with fixed interest rates and shorter repayment terms than other loans.

Should you remodel your home?

There are many factors to consider with a remodel including cost, time commitment, and the potential return on investment.

If you're thinking about remodeling, it's important to do your research and weigh your options carefully.

Cost of home remodeling

Home remodeling can be a costly undertaking. If you're planning on making significant changes, you'll need to factor in the cost of materials, labor, and permits.

It’s always a good idea to budget for unexpected problems during home improvement projects. Any issues that come up could cost you more money than you originally planned.

Time to remodel your home

Another important consideration is how much time you're willing to commit to the project.

A full-scale home renovation can take several months (or even longer) to complete. If you're not prepared to live with dust, noise, and disruptions to your daily routine, it might be better to wait until you're ready before starting.

Return on investment for home remodeling

It's crucial to consider the potential return on investment for your home remodeling project.

In some cases, the value of your home could increase after completing a renovation. However, this isn't always the case, so it's important to consult a real estate professional before making any decisions. They can give you an idea of what similar homes in your neighborhood are selling for and what type of remodel could add the most value to your home.

Looking into this can help you decide whether now is the right time to remodel your home.

A remodel might add value to your home

Anyone who has ever watched a home improvement show knows that renovating a property can be a great way to update your home while possibly adding resale value.

A well-designed and executed remodel can make your home more enjoyable to live in and may make it more attractive to potential buyers should you decide to sell down the line. Of course, not all remodels are equally effective in adding value.

For example, a complete kitchen renovation is likely to cost tens of thousands of dollars, but it could significantly add to your home's value. Conversely, adding a pool might not be worth the investment if you live in an area with a short swimming season.

Ultimately, if you're considering renovating your home, consulting with a real estate agent is essential to get an accurate estimate of what the project might be worth. With their help, you can make an informed decision about whether to proceed.