By ScoreSense.com

For costly home remodels, there are financing options ranging from home equity loans to government financing programs.

A lot depends on your credit scores, since lenders use them to assess your risk level as a borrower. Start by getting your reports and scores from the three national credit bureaus: Experian, Equifax and TransUnion. Knowing your credit scores will allow you to estimate the interest rate you will have to pay on a loan.

One way to finance remodeling is with a home equity loan or “second mortgage.” However, they often involve higher interest rates than your first mortgage.

A home equity line of credit (also known as a HELOC) is another option. It works like a credit card in that the lender sets a borrowing limit.

There are also two government-backed products for financing renovations. Fannie Mae’s HomeStyle® Renovation Mortgage provides funds for remodeling-related expenses. Alternatively, the Federal Housing Administration 203(k) Rehabilitation Mortgage Insurance will let you finance or refinance your house and any rehabilitation costs. The FHA offers a long-term fixed or adjustable-rate loan.

You may also be able to roll a remodel into an FHA refinance or other government refinance program, depending on the equity and value of your home.

Finally, it might be tempting to use credit cards to remodel, but be mindful of the interest rate on the card. Avoid charging renovations unless you can avoid the high interest payments – for example, with a zero percent introductory rate, or if you plan to pay the full balance before the interest charge kicks in.

Before applying for any loans, get your credit scores and reports from all three bureaus in seconds from FreeScore360, powered by ScoreSense®. ScoreSense also monitors your credit and alerts you to changes on your credit profile, helping you to protect your identity and your future credit standing.