 TITLE: How to Finance Your Next Home Improvement Project CONTENT: Other Loan Options for Improving Your Home\n------------------------------------------\nWhile home equity loans and HELOCs can provide an inexpensive form of financing, they're not always the best solution.\nBecause they're secured by your home, the lender can foreclose on your home if you default on your payments, forcing you to sell it so the lender can recoup the amount you owed.\nIf you'd rather not risk the roof over your head, alternatives include cash-out refinancing and personal loans.\n### Cash-Out Refinancing\nInstead of taking on a second loan, a cash-out refinance will refinance your existing mortgage and essentially cut you a check for the amount you want to cash out.\nYour new loan will include the initial mortgage balance plus the cash-out amount and any closing costs you might have rolled into the loan.\nA cash-out refinance gives you the opportunity to finance your home improvement project over a long period of time. And if mortgage rates have dropped since you first bought the house, you may also be able to get a lower rate on your debt overall.\nThe main downside to a cash-out refinance is that you'll pay closing costs on the full loan amount instead of just the cash-out amount. With a home equity loan or HELOC, closing costs only apply to the funds needed for your renovation.\n### Personal Loan\nDepending on the lender, you can do just about anything you want with a personal loan, including financing a home improvement project.\nPersonal loans are typically unsecured debt, so you don't have to use your house as collateral and put your homeownership at risk. Also, you don't need to have a specific amount of equity in your home to qualify for a personal loan, and you may be able to qualify for a decent interest rate even if you have fair credit.\nThere are, however, some drawbacks that go with using a personal loan over a loan backed by your property. For starters, personal loans typically have much shorter repayment periods than home equity products and cash-out refinance loans.\nWhile lenders' terms vary, you can generally expect to have anywhere between one and seven years to repay the loan, based on the original loan amount. Also, personal loan interest isn't tax deductible, even if you're using the funds to improve your home.\nFinally, unsecured personal loans typically charge higher interest rates than secured loans. So if you're planning a big project and needs thousands or even tens of thousands of dollars, you may want to go with a less expensive option. END