You’ve done your homework, looked through magazines, saved links to websites, talked to a designer/contractor, and you’re finally ready to turn your home into the one of your dreams. It’s remodeling time!

Not so fast! Before you get started, you’ll need to find the best financing for home renovations. Although figuring out how to pay for a home renovation can be stressful and confusing, with a bit of homework, there’s no reason the process can’t be straightforward and simple.

How to Get the Right Financing for Home Renovations

Get an Accurate Estimate

The first and most important step in securing financing for home renovations is knowing how much you need to borrow. This can be a crapshoot if you’re doing the work yourself, as you’ll need to guess at a ballpark figure. For a more accurate estimate, work with an experienced contractor who can look at the project and help you better plan ahead. Your estimate should include all labor and materials, as well as 10 percent for any unexpected repairs that may pop up. Once you know how much the project will cost (plus your 10 percent “just-in-case” cushion), you’re ready to secure financing. Here are some of the options you may consider, as well as their pros and cons.

Shopping for Loans Online

Pros: If you’re borrowing $35,000 or less, peer-to-peer lending via an online marketplace such as Prosper or Lending Tree is an option. These platforms often offer reasonable fixed rates. They also have no prepayment penalty if you decide to take care of your entire balance ahead of time.

Cons: Peer-to-peer lending is not ideal for borrowers with low credit scores.

Home Equity Loan

Pros: With a home equity loan, you borrow a lump sum and pay it off over a set amount of time. The interest rate is fixed, as are the payments that you make each month, providing a great deal of predictability.

Cons: Once you borrow a set amount via a home equity loan, you aren’t allowed to increase the amount of the loan.

Home Equity Line of Credit

**Pros: Much like a home equity loan, a home equity line of credit allows you to borrow against your house. Instead of borrowing a lump sum, however, a line of credit works more like a credit card. You can borrow a set amount during the life the loan, withdrawing money whenever it’s necessary.

Cons: In order to get a home equity line of credit, you already need to have a good relationship with a bank. The interest rates for home equity lines of credit are variable, meaning that they can fluctuate throughout the life of the loan. This can make them a more unpredictable form of financing for home renovations.

Borrowing Via a Construction Loan

Pros: One option to provide financing for home renovations is securing a construction loan. These work well for remodeling projects that will total more than the equity you currently have in your home.

Cons: Construction loans aren’t set-it-and-forget-it. They have to be managed, with money being released at specific stages throughout the remodeling process.

Swiping a Credit Card

Pros: Even if you secure funding for the bulk of your project via a bank loan, you may want to consider putting some of the materials on your credit cards in order to earn rewards points.

Cons: Credit card borrowing is only ideal for very small renovation projects. Keep in mind that most cards charge hefty fees for cash advances, so only use your card to pay for materials – not to cash out a contractor.

Securing the right financing for home renovations isn’t one-size-fits-all. With a little homework, you’ll find the plan that’s perfect for you. The home addition or basement of your dream is just weeks away. Happy renovating!