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Financing a Home Renovation in an Economic Downturn

Financing a Home Renovation in an Economic Downturn

Few things are more fickle than the economy. For most people, the ups and downs of the world’s financial health dictate what is affordable and what needs to wait for later.

Home renovation and home improvement projects are significant investments in your home. Though you are ultimately caring for your property and building value, many projects require an influx of upfront funding in order to proceed. If the economy is experiencing a downturn, it can be difficult to figure out how to finance a home renovation project.

It is important to know that you have options if this situation sounds familiar to you. There are many different ways to pay for a home renovation, no matter what your financial situation may be.


One of the most obvious ways to pay for your home renovation is through a bank loan. Many banks approve loans for home improvement or construction projects, especially if you have been a long-term banking customer. It is extremely common for homeowners to need fast money for a home project, so banks and credit unions can often work with you to find a loan structure that works for your situation.

Personal savings

If you want to avoid interest rates, using savings to pay for a home renovation project may be a good option. Be sure to speak with a trusted financial expert if you are looking to spend a large amount or a large percentage of your savings on the project. They will be able to advise you whether or not using your savings is the best option or if a loan would be safer in the long run.


In some situations, a second mortgage or refinancing of a mortgage is a good option to pay for a home renovation project. This is often the case if the project is extensive or especially large in nature. In these situations, a home equity line of credit may not be large enough to cover all of the expenses that you need to finish your project.

Refinance your home

You will want to consider the return on investment (ROI) when financing your home renovation project. Many renovation projects in the kitchen or bathroom can especially increase the value of your home. Depending on the nature of your project, you may be able to refinance your home. If this is the case, the ROI provides a sum that can ultimately help to pay for the home improvement project.

Credit cards

Though it can be risky to use credit cards in some situations, it may be okay to use them for your home renovation project. If you have good credit, you can often access credit cards with no interest for 12 months. This can help you to spread the payments out over a year to make the cost more manageable for your budget.

Be sure to only use a credit card if you know you can pay off the balance before too much interest accrues. The interest on large projects can add up quickly and may result in payments that are impossible to handle.


If you work through a contracting or construction service, they may have options for financing your project. Not all companies offer this, but the ones that do may be able to work with you to fund your project. This can be helpful if you want your bills and communication to be through a single place rather than navigating several different companies.

Be sure that you trust your construction company, especially if you choose to finance through them. If they seem small or have questionable business practices, look for a different team.

Divide the project

In some situations, you can navigate your home improvement project in smaller steps. For example, if you are redoing your kitchen, you could begin by redoing your countertops. In a few months, you can tackle the backsplash and paint. Finally, you can replace the appliances when you are feeling financially recovered from the other projects.

By dividing the project into smaller steps, you give yourself more time to save the money that you need to execute the remodel. Plus, you can take your time and make sure that you do the project exactly to your liking.


Though not all projects are safe to do on your own, consider the things you can do. For example, opt to paint your own walls instead of hiring a company. These smaller projects can be fairly easily executed and can save you money to go towards the more difficult projects, making the overall renovation more affordable for you.

There are several options for renovating your home that are available to you even during an economic downturn. Ultimately, the same wisdom is true no matter what the health of the economy is. Working with quality contractors who get the job done right the first time will save you money in the long run.