Improvements can be pricey, but don’t allow being unsureof how to pay for it keep you from renovating. Here are a fewideas to cover the costs of updating your home:


Many people dip into their savings accounts to payfor their home renovations, particularly if they’re undergoinga minor update. If you don’t want to go into debt renovatingyour home, set a date you’d like to start your renovation andsave whatever you can until then, including any windfalls.

Retirement savings.

Tapping into your 401(k) to payfor a home renovation may be an option for somehomeowners. Just be aware of any possible stipulations orpenalties involved. You may be able to withdraw from your401(k) if you pay it back within a specific time frame; however,if you don’t pay it back on time and you’re under 59 ½ yearsof age, you’ll pay a 10% penalty and your withdrawal will besubject to regular income tax. Also, if you lose your job,you’ll be on the hook for the full amount within 30 to60 days, depending on the guidelines of your plan.

Home equity line of credit (HELOC).

If you have equityin your home, a home equity line of credit allows you toborrow a portion of the total equity amount. This is oftena less expensive way to borrow money, and provides amaximum amount of credit that can be used over a periodof time. Instead of making payments on the entire amount,you’ll make payments on the amount you’ve borrowed,similar to a credit card. A line of credit is ideal when you’renot sure what the total cost of the project is, or if youanticipate that your borrowing needs may vary.

Home equity loan.

These loans allow you to borrow againstthe value of your home. A home equity loan is different thana HELOC in that you borrow one lump sum and the paymentis amortized over the terms of the loan, if you qualify.However, there are risks involved, such as the possibilityof losing your home if you can’t make your payments.

Personal loan.

If you know how much your renovation willcost, a personal loan will give you a lump sum of money touse, which you’ll repay over an agreed-upon period of time.

Credit cards.

If the project is small-scale or DIY,you may consider using your credit cards to payfor it. This method gives you an added benefitof accumulating points and rewards quickly.Additionally, your credit score may get aboost when the amount is paid backin a timely and responsible way.