Once you have decided on the remodeling project, it's time to obtain financing. With today's low interest rates and climbing home prices, homeowners have greater opportunity to borrow against their equity. They also face more choices for accessing equity, because lenders are offering greater options than ever before.

A key decision is choosing between a home equity loan or a line of credit. Although both borrow against the equity in your home, there are differences between them. A home equity loan is given as a lump sum and under preset terms is repaid over a fixed period of time, generally 15 years.

A revolving home equity line of credit, on the other hand, provides a credit limit or line, which you can draw on as needed, making regular payments. As you make payments, you can continue to borrow against the credit line during the draw period. Many homeowners enjoy the flexibility of a line of credit. To determine which option is best for you, sit down with your lender or financial planner.

Some lenders are introducing features to make the process more convenient for customers:

New access options: Card access, such as the Bank of America Equity CreditLine Visa, which directly accesses a home equity line of credit, is growing in popularity. Sandra Endsley, product manager of Bank of America's Equity CreditLine Visa, said that individuals reported in research that they enjoy the convenience of using a card without having to then write a check to transfer the charge.
Cards that access a home equity line of credit benefit from low rates, payment schedules and possible tax advantages of the home equity line. (Potential borrowers should consult with their tax advisors regarding the deductibility of interest and charges for the line.) Whether you're accessing the account through a check or card, the account is still a home equity line of credit and subject to the same terms and conditions.
Line of credit lock-in options: While a home equity loan is commonly available at a fixed rate, lines of credit typically are offered at variable rates tied to the prime rate. Variable rates have been popular recently because of low interest rates. However, as rates climb, the interest rate on a variable loan will increase.
Because many customers prefer the predictability of a fixed rate, many lenders now offer a lock-in option for already advanced portions of home equity lines of credit.
Primary mortgage tie-in options: Many new homeowners want to make improvements or enhancements to their homes right away. Lenders often offer qualified customers the opportunity to secure a home equity line of credit when they close on a primary mortgage.
Technology process improvements: Because of breakthroughs in technology, many lenders can offer decisions nearly instantly. These advancements, which include electronic appraisal and online title verification, continue to decrease the time between approval and closing.

Today's financing options make the remodeling process more convenient and flexible than ever before. So whether you choose to hire the experts or do it yourself, now is a great time to get started.

Courtesy of ARA Content