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Services, Home Loans Article

Loan Options to Get Your Home Renovations Moving

woman calculating home finances

In the current economy, many homeowners are exploring ways to renovate their existing homes rather than move. Whether you’re considering a dream kitchen makeover, upgrading your appliances or being proactive with routine maintenance, it’s hard to determine a renovation budget.

According to, the average kitchen remodel costs between $14,541 and $40,542, with a national average of $26,240 –– other parts of the home cost about half of that.

In their 2020 Cost vs. Value Report, Remodeling Magazine outlines roughly how much homeowners spend on common home improvement projects:

Either way you look at it, renovations and upgrades are not cheap. That’s why for homeowners, it’s important to choose those upgrades that provide the greatest return on your investment and to choose the financing option that best fits your needs.

Home Improvement Loans and Home Equity Loans or Home Equity Lines of Credit (HELOC) are two options available to homeowners when it comes to remodeling and renovations. While both achieve a similar end, the two vary exponentially and understanding how each one works can you help you decide which option is best for you.

So, what’s the difference?

Home Improvement Loans

A Home Improvement Loan provides the financing that homeowners may need for repairs or renovations. Secured by a Deed of Trust Lien on your home, this type of loan requires a contractor and the home owner to sign and assign a Builder’s and Mechanic’s lien contract to the bank. A Home Improvement Loan is intended for projects that require a contractor to perform the work.

How can you use a home improvement loan?

Home Equity Loans and HELOC

Some home owners choose to use the equity in their home as collateral to cover home improvements or unexpected personal expenses.  A Home Equity Loan provides a lump sum amount borrowed with a fixed rate term note. A HELOC is a loan that has a revolving line of credit allowing you to draw on the funds as you need them. In Texas you can borrow up to a combined 80% of your home’s value.

How can you use a home equity loan?

Pros and Cons of Home Improvement Loans and Home Equity Loans
Before you take out a loan, weighing the pros and cons is paramount to help you make your decision.

Speak with a Stellar Bank lending officer

The decision to take out a loan is not one to take lightly and it’s not uncommon to have questions. Contact a Stellar Bank Mortgage Specialist at 713.210.7653 or [email protected] to explore which loan option might work best for you.

All loans subject to credit approval.

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