Financing Options

You have spent a tremendous amount of time and effort researching and planning for your new kitchen--now you have to finalize how you will pay for the project. You should have started this process during your Research Phase, so you should know how much you can afford to borrow and have the basic paperwork ready for a final decision. NKBA has prepared a list of frequently asked questions relating to kitchen remodels (costs, financing, who to hire for the installation). To get the answers, link to "Understanding Remodeling / Frequently Asked Questions" by NKBA.

For any type of loan, you will most likely need the following paperwork:
· the social security number for each borrower
· your most recent pay stub (if self-employed you'll need your business's P&L and balance sheet--signed by an accountant, and the last two year's personal and business tax returns)
· All bank account and creditor information, numbers, addresses, and balance approximations
· If applicable, any documents regarding judgements against you ( i.e. bankruptcies or creditor lawsuits)

Whether you are building or remodeling, keep all of your documents, contracts, and receipts, together--this will also help when visiting with your insurance agent and at tax time. If you are working with a loan officer, give them copies of what they need and keep your originals. Contact the Better Business Bureau to make sure your lending institution is sound and has a good reputation.

If you are building, you will be looking at taking out a mortgage. If you need more money to create your dream kitchen than your builder has allotted, you can often increase the amount of your mortgage to include extra money to make those improvements. Mortgage interest is still deductible, so take advantage of it. Check the rates to get the best available, choose the right type of loan for your situation and the current economy (fixed or adjustable), and avoid loans with prepayment penalties. Check local banks, newspapers, and online sources such as E-Loan or getsmart.com. For more information on mortgage tips and books, call The American Homeowners Foundation at 1-800-489-7776.

If you are remodeling, the easiest option (if you are lucky enough to have extra cash on hand or have saved up the money to cover all of the project costs) is to pay in cash. But note that this may not be the smartest use of your money in today's economy. The majority of remodeling projects are financed through a Home Improvement Loan, Home Equity Line of Credit, Second Mortgage, or Cash-Out Refinancing. There are other financing options that may be available to you through special interest groups such as credit unions, etc. Take some time to review all of your options to see which offers the best opportunity. Contact your current mortgage lender first and then check local and online sources for financing options and associated rates.

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