how to finance a kitchen remodel

Not every home improvement project is both rewarding and a good investment, but of all remodeling endeavors, the kitchen is one of the most satisfying. Maybe it’s because it’s the most used room of the house or because it’s also the most visible, but building a dream kitchen is the most common home improvement project. 

Not only a popular remodel choice, it can also be an expensive one. Replacing the cabinets, countertops and fixtures is just the start. There are also appliances, flooring, and finishes to consider. On average, a kitchen remodel project can cost anywhere from $12,500 to $35,000 and up, depending on size, scope and materials. When you are ready to remodel your kitchen, you’ll likely need to consider home improvement loans to get it done. 

How Can I Finance a Kitchen Remodel?

Any home remodeling project comes with lots of planning and the understanding that there will be both expected and unexpected costs. Luckily there are many financing options to ensure that you can get the project done to meet your specifications. Those with good credit and a strong credit history will have the opportunity to balance the pros and cons of each type of home improvement financing to find the loan that will work best. 

Credit Cards

The easiest way to obtain funding for smaller kitchen projects, requiring a lower loan amount, is to leverage existing credit cards. They’re more straightforward because there is no approval process, required collateral or application fees, ensuring you can start your project right away. The downside of using credit cards to finance a kitchen remodel is that they often come with higher interest rates than other types of financing. It’s also possible that you may not have a large enough credit limit, which could require additional financing on top of the credit debt. Credit cards are useful for emergency repairs and low cost projects, but may not make sense for larger projects where interest will add up over time. 

FHA 203(K) Rehab Loan

When purchasing a new or new-to-you home that comes with some necessary repairs, including a kitchen remodel, a FHA 203(k) rehab loan may be the best option. Specially made for fixer uppers, this renovation loan bundles both the home’s purchase price with the remodeling costs in one loan, ensuring only one payment to worry about. Much like any type of mortgage, the loan terms and rates and terms depend on market conditions and selected lenders. 

The limitation of this type of financing is that it’s limited to those who are purchasing a property, rather than existing homeowners who want to embark on a home remodel project. 

Unsecured Personal Loan

One of the most efficient and effective ways to finance a kitchen remodel is with personal loans. This type of unsecured loan is not backed by collateral, including your home’s equity. Instead, these fixed rate loans deliver a lump sum in a range of amounts, with flexible terms and a manageable monthly payment. The process for obtaining a personal loan is usually less time consuming that other types of financing, considering your creditworthiness and needs. The time before you receive your funds is also shorter, making this type of loan perfect for home improvement projects of any size and scope. 

Home Equity Loan (HEL)

A home equity loan (HEL), also known as a second mortgage, is a loan that is based on the existing equity of your home. With a HEL you’ll borrow up to 80 percent of the equity in your home in a loan positioned much like your existing mortgage. Unlike a cash out refinance or equity line of credit, a HEL is a loan that runs in tandem with your current mortgage, but has terms, interest rates and monthly payments of its own. The advantage of this approach is a long repayment window and fixed rates. The disadvantages are that a HEL will come with closing costs and origination fees. It’s important to consider whether the additional costs are worth it in the long run. 

Home Equity Line of Credit (HELOC)

One of the most popular choices for home improvement project financing is a home equity line of credit (HELOC). Much like a HEL, a HELOC relies on the existing equity of a home to determine how much you can borrow. Lines of credit that use a home as collateral are dependent on the market price of the area and region. Unlike other types of financing, HELOCs often have adjustable rates and rules about how much money you can borrow. This loan may make sense for someone with ample equity in their home, but also comes with closing costs, financing fees and other upfront costs that can outweigh the benefits. 

What’s The Best Way to Finance a New Kitchen?

Although there are many options available to help pay for a kitchen remodel, one type of loan quickly outshines the others. Personal home improvement loans offer many advantages above other types of financing including seamless application processes, flexible terms, fixed rates and varied loan amounts. With shorter processing windows, and no need for collateral, personal loans are an easier way to get your project started right away. 

How to Apply for a Kitchen Remodel Loan

Are you ready to embark on your kitchen remodeling project? When you apply for a personal loan with AmeriFirst, the process is painless. The online application starts with just a few quick questions. Once you’re approved, you’ll receive your loan amount, anywhere from $5,000 to $80,000 directly deposited into your account. And just like that, you’re on your way to building your dream kitchen.

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