Do
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Pay as you go If you have the money for improvements, this is a smart way to pay. Don’t advance funds to contractors until the work is done, and done to your satisfaction. Pay only as portions of the job are complete. Exception: special-order materials.
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Rely on home equity Leverage the home’s equity to fund improvements and at the same time add value to the home. The borrowing limit will be based on the available equity and is typically tax-deductible.
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Look for a no-fee line of credit For those who do not wish to use a home equity loan, this is a viable alternative. You’ll find more payment options as well as the ability to fix the rate on a portion of your line at no extra cost. Opting for a line of credit gives you immediate access to funds for future projects or unexpected expenses. A home equity loan requires that you start repaying right away.
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Don't
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Jump the gun It’s not wise to start the project until you’ve nailed down the financing. Construction already underway could negatively affect your ability to obtain financing.
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Overdo it Don’t renovate beyond what neighborhood housing values can absorb. Take a look at local tax and real estate sales records for home values nearby. If your project boosts the value of your home too far above those of your neighbors, it may put you at a competitive disadvantage when the time comes to resell your property.
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