According to the Houzz poll, more than 50% Americans are going to improve their houses next year. The Residential Remodeling Index reached 114.4 which is 5.2% higher than last year [Metrostudy]. House repair is not a cheap thing. Where do most people get the money? What to do if you lack the funds? Read the article to find out.

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Harris and LightStream state that 30% Americans are going to pay by credit cards. But do you remember that the average interest on plastic is 18% and more? The renovation can cost you a fortune this way.

So, what better option do you have? The experts advise these five ways to get the necessary funds for home repair:

• A cash-out refinance.

You could think of refinancing your mortgage and using the extra money for remodeling.

"If you can refinance to a lower fixed interest rate or a shorter term, that's a win for your finances," says Jennifer Beeston, vice president of mortgage lending at Guaranteed Rate Mortgage, based in Santa Rosa, California.

Keep in mind, however, that you'll be charged closing fees which may make up a substantial amount; besides, it’s a long process. But this seems the wisest way to get one loan at a fixed rate.

• A home-equity loan.

This is a so-called "second mortgage". You take out a home-equity loan against equity you've accumulated in your property. The interest rate is usually fixed, you repay the loan in a lump sum, and the terms vary from 5 to 30 years.

Byron Ellis, certified financial planner with United Capital Financial Life Management in The Woodlands, Texas, says: "If you have a lot of home equity, and plan a long-term renovation project, investing some of that equity back into your house could be a wise decision"

• A home equity line of credit (HELOC).

You also borrow against your home's equity. But you may decide when to withdraw the cash, though you have a preapproved limit of the amounts and a specified period. The interest rate may vary depending on the current rates. Good news is most HELOCs don't charge closing fees.

"A HELOC offers a very low introductory rate, and you only pay interest on the amount you withdraw," says Randall Yates, CEO of The Lenders Network, headquartered in Dallas.

• An FHA 203(k) rehab loan.

Though it suits only those who buy a home or refinance for the first time. You need to find a FHA-approved lender, and it applies to older homes and fixer-uppers. But it makes the borrowing much easier as it consolidates your mortgage and rehab funds into one loan. The FHA requirements are not so strict -- down payment is lower (3.5%), and you can get approved even with a 620 FICO credit score.

"If your home currently doesn't have a lot of equity, an FHA 203(k) loan is the way to go, as you can borrow money based off the estimated value once the home is finished," Beeston notes.

• A personal unsecured loan.

It’s a great option as you are not required any guarantor or collateral, so you don’t risk losing your house and the borrowing process is much faster. Though the interest may be higher.

"This can be a good idea if you are repairing the house to sell immediately. But read the terms and conditions carefully. Some direct lenders, for example, may want you to pay the whole amount back in three months, while others may give you three years," says Beeston.

Yates adds that a personal loan "may suit those with a commission job where their income fluctuates. If you meet any financial difficulties, at least you won’t lose your house."


In cases where mortgages are sold while they are in the process of being modified, current Colorado law allows the new servicers of the mortgages to disregard the proposed modifications. HB13-1017, which has the support of the Colorado Banking Association and other finance and real estate industry groups, ends that practice.

Because loan modifications often involve homeowners who are struggling to make their payments, the collapse of a loan modification often turns a distressed loan into a foreclosure.

Before making up your mind which financial help to choose shop around for various options and find out all the necessary information. Compare rates and fees, terms, amounts and other conditions to get the best deal. Read the reviews and choose only reliable experiences lenders. Or compare the best offers on

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