Variable vs. Fixed Interest Rates
For some loans, the interest rate stays the same throughout the loan. This is known as a fixed rate loan. On other loans the interest rate can rise or fall as market conditions change. These 'variable' rates are usually tied to some common market wide interest rate like the prime rate.
Secured vs. Unsecured Loans
In general, loans can be described as secured or unsecured. An unsecured loan is a loan in which the borrower agrees to repay the money according to a pre-set schedule. A secured loan is the same thing, except that if the borrower doesn't keep up with the payments, he/she gives the lender the right to seize a particular asset and sell it to raise the money necessary to pay off the loan—the house itself is the typical collateral.
Contractor Home Financing
Often, when a contractor offers financing, he is simply using an established relationship with a mortgage lender to expedite the processing of your loan. In such cases, you will still be facing the same array of options you see described in this guide. However, there are a few firms that directly provide the home financing. This is most common with activities like replacing windows, installing siding, or putting in a swimming pool.
Specific Financing Options
Savings: Many people prefer to save up the entire amount they need before undertaking a major home improvement or remodeling project.
Credit cards: The main advantage of using credit cards or the cash advance checks that are often associated with them is that there is no hassle at all.
Cash-out refinance: If you have enough equity, or if interest rates are lower now than when you first borrowed the money,"
