A kitchen remodel is one of the most expensive home improvement projects a homeowner can undertake. HomeAdvisor reports that a typical kitchen remodel will cost, on average, between $12,565 and $33.259. The national average runs around $22,000, but even the lowest-priced remodels sit at around $10,000-$15,000. However, a kitchen remodel has the largest payoff in boosting a home’s resale value, and—perhaps most importantly—greatly improves the quality of life for its occupants.
However, don’t allow these daunting prices to discourage you. Homeowners should consider a range of financing solutions before embarking on a remodeling project. It turns out that, despite these reports, you can have your dream kitchen without going broke.
Refinance your mortgage.Many homeowners would benefit from a refinanced mortgage and adding a kitchen remodel into the mix is the best and easiest way to fund your project.
Home equity. If you do not want to refinance your mortgage, a home equity line of credit is a great option. These loans allow borrowers to draw out money as they need it, paying the funds back with minimum monthly payments. Just be sure to make your payments—if you let payments lapse, you could lose your home.
Borrow from your 401(k).Many 401(k) programs will allow you to borrow from the account and pay the funds back as a loan. This is generally done in the form of a payroll deduction, which may streamline the repayment process. Keep in mind that, if you leave your job while repaying the loan, the balance will be due immediately.
Construction loan.These loans are often used to build a house or make major renovations. They are not easy to find and come with a lot of requirements. Construction loans are often managed as short-term loans and are refinanced into a traditional mortgage once the renovation is complete.
Contractor financing. Your contractor may have a
relationship with a finance company. Though this may be more expensive than
other options, it is worth the conversation to ask your contractor.