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March 24, 2020

What’s the best way to pay for a home renovation?

Q: I’m doing some home renovations this spring and I’m not sure how to finance the expense. There are so many loan options, but which one makes the most sense?

A: Whether you’re gutting your entire kitchen or turning your basement into a home theater, we’ve got you covered. As a TruMark Financial member, you have several choices when it comes to funding a home renovation.

First, let’s take a look at some common choices financing:

  1. Home Equity Loan

A home equity loan is a loan that is secured by your home’s value. Home equity loans allow you to borrow a fixed amount of cash, which you receive in one lump sum. Most home equity loans have a fixed interest rate, a fixed term, and a fixed monthly payment.

  1. Credit cards

If you’re only doing some minor touch-ups on your home and you can afford to repay the charge within the next year or two, a credit card could work.

However, for bigger projects, funding them through your credit cards can have negative effects on your financial health.

  1. Personal loans

Personal loans are short-term loans that may or may not be secured by some form of collateral (like a car or other titled good). They typically need to be repaid within 24-60 months.

  1. Retail credit cards

Retail stores often lure customers into opening a credit card with the promise of being granted savings on future store purchases. Some retailers, especially home-improvement shops, may encourage you to finance a large renovation project on their card. However, this is usually not a good idea due to high interest rates.

Enter the home equity line of credit (HELoC).

A home equity line of credit (HELoC) helps you stick to your budget because instead of walking out with a huge amount of cash when you open the loan, you have the flexibility to use the funds on an “as-needed” basis. TruMark Financial’s HELoC Select starts as a line of credit and then allows you to switch all or part of the balance to a fixed rate at any time, giving you a manageable payment.

When looking for a way to pay for home improvement projects, we recommend a HELoC Select from TruMark Financial. Call 1-877-TRUMARK, click, or stop by today to get started on your application.