Do you want to renovate your home but you realize that it would cost more than what you expected? It’s a fact that “scope creep” is usually what home renovations have. Sometimes, when renovations start and progress, new problems are discovered and in the ending up with more work than predicted. Since this is hard to deal with as funds are often limited, building contingencies into your financing plans is a good idea. That way, you’ll be ready for whatever surprises or problems that will pop up.

There are 2 candidates for you to consider when it comes to renovation financing. These are the home owner’s line of credit and the loan for home equity. For home equity loan, the amount of equity that you’ve built up in your home is what this is based from. This loan can also be referred to as second mortgage. If you want to calculate this, you need to take the value of your home and subtract the outstanding amount left on the original mortgage. Remember that if you own your home outright, then the value of the home would be your amount. Say for example your home is worth $250,000, you’ve paid off $110,000, then $140,000 would be your accumulated equity. The loan is guaranteed by the property value so the interest rate and payments are low. Securing fixed interest rates is also normal for such loans.

The homeowner’s line of credit is also a popular financing option. This loan doesn’t have finite amount except for the limit that’s again decided by your equity. This allows for a lot of room when considering costs, making it a popular option. This loan operates like a credit card complete with a variable interest rate. It doesn’t have a definite end date and it’s the most flexible option. As long as you need it and don’t close it out, the line of credit remains open.

If you want to discern the type of loan that will suit your needs, then you must confer with a banker or financial expert. You must give priority to your needs and find a proper loan for you. It’s important to plan your payment schedule carefully because your home will be on the line as collateral. Finding out what works for you and your budget is also important, so you need to do your research of all the options.

Author bio: Flora Boyd is a researcher and author for the high protein foods and fat list websites.