Home Equity Loan
Pros
-  Usually tax deductible.
-  Lump sum is paid to you at the start so you have flexibility of what you do with the
   money.
-  The interest is typically a fixed rate.
-  Typically have a lower closing cost than a cash out refinance
Cons
-  A second loan to manage.
-  Typically shorter term than a standard mortgage.
-  Requires that you have sufficient equity in your home.
-  You have to pay interest on the entire loan amount even though you may not need
   the money to pay for remodeling right away

Home Equity Line of Credit
Pros
-  Usually tax deductible
-  Since it is a revolving credit loan, you only borrow the money you need during the
   initial draw period (A set period where you can pull available funds out of your
   revolving account). 
-  During the initial draw period, your minimum payment is interest only, so finance
   charges are lower at the beginning.
-  Typically have a lower closing cost than a cash out refinance
Cons
-  A second loan to manage.
-  Typically shorter term than a standard mortgage.
-  Requires that you have sufficient equity in your home.
-  The interest rate is based on the prime rate plus margin which is an adjustable rate.

Construction Loan
Pros
-  Good for larger remodel projects and if you don't have enough home equity to take a
   loan to cover construction costs.

Cons
-  Higher interest rate than home equity loans.
-  Not tax deductible
-  Usually short term until construction is complete then replace with a new first
   mortgage.

Refinance and cash out
Pros
-  Usually tax deductible.
-  You only have a single loan for your home.
-  Typically have a lower interest rate
Cons
-  Requires that you have sufficient equity in your home.
-  You have to pay interest on the entire loan even though you may not need the money
   to pay for remodeling right away.
-  Closing costs are typically higher than a Home Equity Loan or Home Equity Line
 

 For more information about remodeling or moving, please visit www.nichelending.com or contact us at remodelormove@nichelending.com or call toll free at (888) 491-2001

"About the Author -Dan Fritschen, founder of www.remodelormove.com, www.remodelestimates.com and author of the best selling books Remodel or Move? Make the Right Decision and The Complete Remodeling Workbook and Organizer (available at www.remodelingorganizer.com).

Do you have remodeling or moving questions? Email Dan directly at dan@remodelormove.com.