How to Pay for a Home Remodel Without Tapping Your Equity | Personal Finance

Jene J. Long

If you choose credit cards to pay for the remodel, make them work for you. For example, some cards can give big rewards on certain purchases, including home improvement expenses. Stores may also offer cash back, which could add up if you’re planning to buy most of your supplies from the same store.

Borrowers with good or excellent credit (690 or higher FICO) are the most likely to qualify for these cards.

If you already have money saved for the renovation, but still want to reap credit card rewards, Johnson recommends using rewards cards to pay for the remodel and then paying them off in full each month. This way, you can build credit and get cash back without paying the card’s interest rate.

You can use a credit card beyond what you have saved, but try to pay the full balance to avoid letting the interest outweigh the rewards.

For small projects — say, a few thousand dollars — consider using a 0% APR credit card, says San Diego-based CFP Jamie Lima. If you can pay the project off during the interest-free introductory period, typically 12 to 18 months, you can upgrade your credit and your home at the same time.

“You benefit from getting the project done, you’re getting to build credit for yourself, you’re borrowing at a 0% interest rate,” he says. “It’s a win-win all the way.”

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