There are several ways for you to fund your project:
Cash
Using cash on hand from your checking or savings account is a great way to avoid paying interest or using equity from your home. If you’re comfortable doing so, another way to fund a project in cash is to take a cash advance from a credit card.
Cash-Out Refinancing
In a cash-out refinance, you extract equity in your house and turn it into cash to fund and complete the project. You can use the following formula to calculate your available equity:
HELOC (Home Equity Line of Credit)
A Home Equity Line of Credit is a line of credit secured by your home that gives you a revolving credit line. This is typically considered a second mortgage.
A line of credit is a good option when the project is in the planning stage. The line of credit comes with checks that you can disburse as the project progresses, which will save on interest. The line also gives tremendous flexibility in regards to the timing of funds needed. The downside is these lines are adjustable and are tied to prime + margin.
Home Equity Loan (AKA 2nd Mtg)
Also known as a second mortgage, a home equity loan is great if you know the amount needed to complete your project and you don’t foresee needing additional money. A fixed-rate loan at a time when interest rates are rising is also a positive.
Renovation Loan
Renovation loans base equity on the future value when the project is completed versus the current value. The names of these loans include HomeStyle Renovation, 203K Loan, and Reno Refi. These loans take time to complete, but basing the loan on the future value could be beneficial if cash is tight.
Private Loans
Private loans do not have rules and regulations and carry a higher interest rate. Private loans are completed on a case-by-case basis, and you can learn more about financing projects from PMG Funding.