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Home Improvement Guide 2007
On the money
Whether it's a fresh coat of paint or a total home renovation, sooner or later it comes down to paying for it.
On the money
Finding cash for your remodeling plan


New bathrooms, an updated kitchen, a finished attic -- remodeling project choices are many. Fortunately, there are also many ways to finance a do-it-yourself home makeover.

No matter what job weekend warriors take on, experts note, it's important to ask two questions first: How much money do I need, and for how long? Pin down those details, and it's easier to choose between a home equity line, cash-out refinancing and good old plastic.

"How long are you going to pay for it? Will it take you less than a year to pay off? If so, then maybe consider using a tax refund," says syndicated financial columnist Ilyce Glink. "Will it take 20 years? Then maybe a refinance makes sense. Once you determine this, then you can decide what option is best."

Financing can be short-, medium- or long-term. Within each of those categories there are several choices, each with their own advantages -- and drawbacks.

Ray Ferrara, president and CEO of Clearwater, Fla., financial planning firm ProVise Management Group, says choosing among financing methods is generally easy, as long as you have equity in your home, no credit problems and flexibility on your time horizon.

But there are no rules of thumb, Ferrara says. It takes an honest assessment of one's financial situation, not a cookie-cutter formula.

Borrowing a "relatively small amount," for instance, can mean different things to different people, he says. "You would be better off with short-term or intermediate financing," Ferrara says. Short-term financing can include opening a home equity line of credit, or HELOC, using cash from savings, a credit card or a home improvement center promotional offer, a construction loan from a bank -- even a loan from your 401(k) or life insurance policy.

Cash for remodeling
The best bet is to look for a loan that will cost you the least in interest and allow you to pay it off in as fast a time frame as comfortably possible, giving preference to tax-advantaged options.
Here is a breakdown of some of the different options as well as pros and cons of each choice:
Financing options
1. Home equity loan
2. Home equity line of credit
3. Refinance existing mortgage
4. Construction loan
5. Savings
6. Hybrid savings-equity loan
7. Personal loan or line of credit
8. Credit-card financing
9. Store financing
10. Contractor or private party loans
11. Cash-value life insurance
12. 401(k)
-- Posted: April 4, 2007
 
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Home Equity
Compare today's rates
NATIONAL OVERNIGHT AVERAGES
$30K HELOC 4.35%
$50K HELOC 4.06%
$30K Home equity loan 5.06%
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