Pros and cons of home improvement loans
When thinking about improving your home be that be the swimming pool or the kitchen always consider how you will fund your home renovation from the point of view of low interest rates, easy availability, flexible payment options, labor costs, control over the loan spending etc. Here we do a quick review of the various funding options available.

Cash and Liquid Assets

Pros
  • No interest, no fees, no charges.
  • You are not dependent on anyone else.


Cons
  • Depletes any reserves you may have.
  • Most people don't have a lot of cash available.


Bottom Line: Cash and liquid assets are the best way to fund your projects--but only if you've got plenty to spare.

Credit Card

Pros
  • Money available quickly.
  • Lucrative points or rewards possible on some cards by charging large home-related purchases.


Cons
  • Danger of high interest and fees.
  • Give you false sense of security that you have more money than you actually have.


Bottom Line: A tricky way to finance home renovations, and one that requires attention and maintenance.

Home Equity Loan

Pros
  • Large amounts of money may be available for large projects like additions.
  • Lower interest rates than personal loans and credit cards.


Cons
  • If you keep depleting your equity, you reduce the sum you will receive when you eventually sell the house.
  • The large amounts available with this loan encourage spending on things unrelated to the renovation.


Bottom Line: Target this loan only for specific projects.