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You finally decide to make improvements to your home, but you aren’t sure of the best way to pay for them…

Where to Start?
There are several options when trying to fund your home improvement project. Definitely put in your research and evaluate which method fits your situation best.

What are the most commonly used methods for financing home improvements?

Cash/Savings
Your savings account is the easiest and most obvious way to finance your home remodeling. However, spending your entire reserve account could put you in a difficult spot if the unexpected happens.

Furthermore, you can often save on construction costs by completing multiple projects at once. You might miss out on these savings if you opt to complete projects as you acquire cash funds.

Retirement Investments
Funds in your retirement could serve as an option to pay for improvements if they are accessible. Not all employers or plans allow for withdrawal, so please consult your provider. On a positive note, tapping your retirement funds allows you access to money that may not otherwise be available, but there are drawbacks.

Using your retirement account now could delay your retirement. There will likely be additional tax obligations or penalties for withdrawing this money. Finally, withdrawing the money now means that it you would be forgoing the growth potential of the investment returns over time.

Refinance Your Mortgage
Mortgage rates are once again significantly low. Refinancing your mortgage now could put a few thousand dollars back in your pocket over the course of a year, which you can then use to remodel or restore your home, thereby increasing its value. Many homeowners don’t realize they’re currently eligible for refinancing, or how much they can save. Check with a mortgage professional to see if you qualify.

Loans
A loan is a common method for securing the funds needed to make home improvements. There are a multitude of different financing options available. Refinancing, Home Equity loans, credit cards, or unsecured loans to name a few. However, the right loan is dependent upon the size and scope of your project. It is best to consult a financing professional to best assess your situation and specific needs.

Contractor Financing
Many contractors have trustworthy financing programs directly through FDIC-member banks to allow homeowners to finish their projects for a low monthly payment, depending on the project. These financing options can be a form of low-interest financing.

Grants
Most municipalities offer some sort of grant or low-interest loans to homeowners for home improvement. These programs have several varieties of grant and loan options, and qualifications can be based on income, or type of work that needs to be done to the house. In some cases, like exterior painting, the work is done by volunteers and is free. In Minneapolis, homeowners can find more information here.

Nick Thiry is a Senior Mortgage Banker for Congressional Bank in Minneapolis. Please contact Nick at 1-952-920-9520 or [email protected] with any questions pertaining to refinancing or mortgages in general.