Kitchen Remodel Financing Options

The kitchen, a place where meals are made and where all the goodies are kept for those late-night snacks and guilty delights. It’s also the heart of your home where guests seem to congregate even when there’s a comfortable couch and a larger-than-life big-screen T.V. with plenty of viewing options just waiting a room away.

It’s no secret, the kitchen gets the most foot traffic of all the rooms in your house, and with all that action comes a lot of touching, opening and closing, spilling and cleaning, all of which takes an immense toll on the countertops, the floors, and cabinets. Such wear, in conjunction with time, make a kitchen look run-down and outdated, in bad need of a face-lift at the very least.

For most homeowners, a simple cosmetic overhaul won’t be enough to satisfy their needs and wants. They’re after a great, eye-catching concept with plenty of state-of-the-art gizmos to bring functionality up to a whole new level. That’s where reality collides head-on with fantasy and it becomes all-too apparent money is the single biggest obstacle between the tired look and kitchen bliss.


To get the most out of your makeover, you’ll first have to determine a budget, which can be difficult to set because most people do not have an accurate assessment of the associated costs. It’s not that easy to arrive at even a ballpark figure as there are many factors which come into play. It’s not only materials and labor, but how those things are calculated based on the contractor you choose to hire. In other words, you might find a professional that is able to snag a real discount on materials, but their per-hour rate is a bit more than another.

No matter your budget size, give some thought to what would happen if you went 20% over. A 2009 Consumer Reports survey found that 56% of kitchen remodels went over budget. In our household we really bent the curve– spending about 30% more than we originally planned due to our preferences in higher-quality finishes and materials. Be prepared to make the tough choices or dig a little deeper into your pockets. Having a plan in place early and identifying exactly how much you can spend will put you in a much better position to come through your home-improvement project unscathed. —FOX News

One way is to decide what it is you most want and what isn’t really important. For instance, if you are thinking about changing the layout, you’ll find that you’ll not only need a contractor, an architect, and likely an engineer. While these costs are a smart part of the total, it’s the changing of the layout that will really balloon the budget. Speaking of budget, you ought to start with what you can truly afford and how to pay for it and be able to put 10 to 15 percent aside for contingencies because these are inevitable.

Unique Kitchen Remodel Financing Options

This is the juncture when you need to get a little creative and think outside-the-box in order to pay for you kitchen remodel. Here are five different ways, plus a bonus option, from which to choose:

  • Personal savings. If you have the cash on-hand, and it won’t wipe-out your emergency fund, then this is definitely the way to go. The only drawback is not reigning-in the urge to splurge. Watch every dime because if you don’t, you’ll find yourself digging further into your pocket.
  • Retirement accounts. Aside from cash, this is the best option because if you borrow from your 401(k), you’ll pay yourself back principal and interest. What’s more, you’ll “feel” the same phenomenon as borrowing from a lender with a decided emphasis on paying it back in a timely manner.
  • Home equity products. A home equity line of credit or a equity loan are the next best options to finance a kitchen remodel. The drawback here being how long you’ve lived in the home and the size of your down payment, if any.
  • Contractor loans. Some contractors offer financing, but the rates are generally higher than you’ll find by going to a bank or credit union. The payoff is the convenience and less strict borrowing standards.
  • Title 1 home improvement financing. These loan products typically have a term of up to 20 years and the interest rates are competitive relative to like financing options. What’s more, you don’ need equity in your home, but this will come with limitations and do not cover the cost of luxury items.

Another option is to reduce expenses by going hybrid with financing, cash, and sweat equity combined. By going the do-it-yourself route for part of the project, you’ll be able to make a substantial reduction in the total because as every homeowner knows, labor is the single-largest cost in a home improvement project. In addition, you can sell-off stuff that’s stuffed into your garage, storage space, and attic to help offset the cost of overhauling a kitchen.