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When it comes to financing home improvements, there are a lot of ways to pay for every project. From replacing an appliance to adding a room or two, you can cover project costs through loans, great retailer deals and financing options that make the most of Currently low interest rates. So, what's the first step toward financing your home improvement dreams? Careful consideration of the potential return on your investment and its impact on your home's resale value. Over-customized features, unusual color palettes and changes made to follow fleeting trends aren't great ways to spend your money, no matter how you finance a project. "A lot of times, the home improvements that people make are ones they shouldn't be doing to begin with…Generally overdoing it on a project, or renovating a kitchen every few years," says Pete D'Arruda, a financial advisor and president of Capital Financial Advisory Group in Cary, NC, and author of the personal finance book, Fine Print Fiasco. "It's almost like a way to spend themselves into happiness, and that usually doesn't work." With a truly value-adding project plan in mind and a realistic budget assembled, here are home improvement finance options to consider. Store Cards -- How they work: As many homeowners choose to improve their current digs over jumping back into the housing market, home improvement retailers are responding with a range of great deals that highlight innovative products and make improvements easy. A store credit card is a convenient means of financing smaller-ticket items like appliances and project materials, and usually involves a delayed payment schedule [typically from six to twelve months] and low or no interest on the balance for a predetermined period of time. -- What you need to know: Approval and credit limit for a store card will of course depend on your credit history. To get the most out of any low-to-no-interest purchase promotion offered, make sure you'll be able to pay off the balance within the deal's deadline?otherwise, you'll be socked with interest of as much as 20 to 30 percent, often applied to the original amount charged. Store Finance Programs -- How they work: Also appealing to big-box customers are store finance programs that cover project materials and retailer-contracted labor for bigger improvements like new flooring or kitchen updates. These unsecured loans usually require a minimum initial purchase of $1,000, and terms often specify no payments or interest on the loan for the first six months, after which the set payment schedule and interest accruals begin. -- What you need to know: Store finance programs can be a good choice for those who haven't been in their homes long enough to build up the equity needed for a bank-issued loan. Just don't be pressured into a big purchase with a “here today, gone tomorrow” sales pitch. The right deal for your project will still be waiting for you the next day if you take a night to sleep on the idea before signing. Before you jump into the home improvement financing fray, take time to weigh your options and be sure which is the best match for your project and overall financial picture. The trick is, of course, to make sure the the cost of the money doesn't exceed the value of the project. Free online financial calculators can help you get started with projections, and if you work with a financial planner, consult with them as well. The more you know about home improvement loans, the better the decision you'll make about how to finance your home improvement projects. The Money Pit is a publisher of home improvement & home remodeling content. The Money Pit produces the largest home improvement radio program in America. For more information visit www.moneypit.com.
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