Renovating your home can be a sound financial investment. If you opt for appealing upgrades, it will increase the overall value of the property. What if you don't have the cash on hand to cover the remodel, though? While it’s inadvisable to take out loans for consumables, borrowing money for home renovations could be a savvy financial move that pays off in the long run. If you decide to take this route, here are a few of the most popular options to consider. 

3 Loans You Can Use to Cover Home Renovations

1. Home Equity Loans

As long as you have at least 20% equity in the property, you can borrow against it by taking out a home equity loan. Also known as a second mortgage, these one-time installment loans are not vulnerable to fluctuating interest rates, and each monthly payment will remain the same over the life of the loan.

2. Home Equity Lines of Credit

Like home equity loans, you borrow home equity lines of credit (HELOC) against the existing equity in the property. Unlike loans, though, HELOCs have a revolving balance. As such, their payments vary considerably from month to month, depending on how you use the available funds. HELOCs are helpful when you’re planning to make a few large purchases over an extended period because you can keep repaying the balance and then borrowing more.

3. Cash-Out Refinancing

A cash-out refinance entails refinancing your home for more than the existing mortgage. Naturally, you’ll need adequate equity in the property for the bank to approve the application. Then, after using most of the funds to pay off the existing mortgage, you can use what remains—the difference between the two mortgages—to renovate your home. For the best interest rates, you’ll need a high credit score and considerable equity for collateral.

If you want to take out a loan for home renovations, turn to First & Peoples Bank and Trust Company. Since 1932, this locally owned community bank has been serving the financial needs of residents and businesses throughout Russell, KY. With branches in Russell, Flatwoods, Greenup, and South Shore, not to mention online services, they offer all the conveniences of modern banking. To find the branch nearest you, visit their website. To learn more about their application process, call (606) 836-0211.