Plan Home Improvements

Thinking of making some home improvements but not finding time?
Whether you need a new kitchen, an outside deck or even new windows,
there are some easy and quick steps that will help you determine the best
way to finance your additions.

Step1: Add Up Your Project
From blueprint to finish carpentry, use a checklist to estimate your total
project cost. If you work with a contractor, get a comprehensive bid.

Step2: Make a Budget
Set aside any extra cash that you have for your project. Be sure to include
a surplus, or make sure you have a ready access to savings (like CD or
money market) in case your project goes over budget. If you don't have
cash, explore all options for financing before you decide you can't afford it.

Step3: Getting The Money
Explore all financing options and select the one best-suited for you.
(i) Consider cash-out option by refinancing your existing mortgage and
taking all or part of your current equity in cash. Consider this option only
if you plan to live in your home long enough to make refinancing
cost-effective.
(ii) Second Mortgages or home equity loans are most appropriate for
projects requiring a lump sum payment.
(iii) Home equity lines of credit are most appropriate for short-term
projects or projects requiring incremental payments.

Always consider financing large projects versus paying cash. It may be
more profitable to invest your cash, and refinance or take out a 2nd
mortgage. If you pay cash, always pay in agreed-upon increments.