FINANCING YOUR KITCHEN REMODEL

From comparing loan options to advising on financing strategies, homeowners have several options for financing a kitchen renovation, showing that it’s more than possible to get your dream kitchen without breaking the bank.

Author: Elinor Cohen

Design: Canal Design + Build

Deciding to remodel your home kitchen can be a huge investment, both financially and timewise, for any homeowner. Once you get past the initial excitement of living in your updated kitchen, you’ll also see the increased property value this renovation will have on your home.

Prospective buyers will likely want to see updated fixtures and finishes, new kitchen appliances, replaced countertops, and individualized touches that make your kitchen unique to your home. While it will certainly be exciting to start this project, it’s also likely to incur some expenses. The good thing is that many home improvement loans exist to help cover the costs of your kitchen renovation. This means that you can get the kitchen you’ve always dreamt of without completely depleting your savings. Below, we’ll cover everything from the basics to the specific:

·       How to finance a kitchen remodel

·       How to use a personal loan to finance your kitchen remodel

·       How to use a home equity loan to finance your kitchen remodel

·       How to use home equity lines of credit to finance your kitchen renovation

How to finance a kitchen remodel

High costs and the solid potential for a good return on investment lead many homeowners to seek out kitchen renovation loans from banks. As long as you are able to keep up with monthly payments on your home improvement loan, financing the project is a worthwhile idea. Kitchen renovations have the potential to significantly boost the value of your home, upping the resale value when you are ready to put your house on the market. The three most common ways to finance a kitchen remodel are personal loans, home equity loans, and home equity lines of credit.

Design: Canal Design + Build

USING A PERSONAL LOAN TO FINANCE YOUR KITCHEN REMODEL

Personal loans are great for homeowners looking to make changes to their houses because of their versatility and flexibility. As reliable solutions for financing a renovation, personal loans make it easy to put money towards almost any situation. Personal loans don’t pigeonhole borrowers into specifying a “home improvement loan” or a “kitchen loan.” Instead they simply cover the costs of the renovation project at whatever the budget may be.

Pros of Using A Personal Loan for Your Kitchen Remodel

  • Quick funding

  • Low-credit borrowers may quality

  • Flexible amounts

  • No collateral required

Cons of Using a Personal Loan For Your Kitchen Remodel

  • May have higher interest rates or annual percentage rates than other kitchen financing options

  • Loan terms may be shorter than lines of credit or home equity loans

Some of the best options for financing a kitchen remodel with a personal loan, as rated by lendedu.com, include LightStream, SoFi, and PNC (if you have good credit), Marcus and FreedomPlus (if you have fair credit) and OneMain Financial (if you have poor credit).

Using A home equity loan TO FINANCE YOUR KITCHEN REMODEL

An alternative to personal loans for financing your kitchen is to use a home equity loan. This can be a cost effective solution for homeowners with available home equity. Home equity loans use the home as collateral, typically resulting in lower interest rates than with personal loans. The downsides to using a home equity loan is that you’ll likely wait longer to receive funding and the application process can be lengthy.

Pros of Using a Home Equity Loan For Your Kitchen Remodel:

  • Lower interest rates compared to personal loans

  • Ability to quality regardless of credit strength

  • Larger loan amounts available depending on home equity amount

Cons of Using a Home Equity Loan For Your Kitchen Remodel:

  • Your home is collateral, meaning it will be on the line if you cannot repay the loan

  • An appraisal may be required to determine the property’s equity, resulting in an added cost

  • Borrowers may pay closing costs for home equity loans

Some of the best options for financing a kitchen remodel with a home equity loan include TD Bank, Spring EQ, and Discover.

Using A HELOC To FINANCE YOUR KITCHEN REMODEL

Home Equity Lines of Credit (HELOC) are great options for kitchen renovations. They operate like credit cards, specifically designated for your home improvement project. By establishing a flexible line of credit, you have the ability to withdraw from the account as much or as little, and as frequently as you need. HELOCs are best suited for homeowners planning to complete their kitchen remodel over several months. Here as well, the home is collateral, meaning it is imperative that homeowners understand how much they can really afford to repay.

Pros of Using a HELOC For Your Kitchen Remodel:

  • Potentially lower interest rates when compared to personal loans

  • Flexible lines of credit that can be used multiple times over the life of the account

  • Longer timeline for repayment

Cons of using a HELOC For Your Kitchen Remodel:

  • Overborrowing is a common problem

  • The home is collateral

  • Interest rates tend to by higher than with home equity loans

Some of the best-rated options for finding a HELOC lenders when remodeling your kitchen include M&T Bank, Figure, and Regions Bank.

Design: VIGO

Whether you’re thinking about just a few upgrades or a total overhaul, renovating and remodeling your home’s kitchen is more than financially possible. Use any of the aforementioned financing options and you’ll see just how easy it is to get your HGTV-ready kitchen in record time.


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