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What Is The Best Way to Finance a Home Addition?

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Dear Moss Building & Design,

I am thinking about putting an addition on my home, but I’m not sure the best way to finance it. What are some of my payment options?

— Dulles Mom


Dear Dulles Mom,

Researching how you will finance your remodel does not have to be a tedious chore. Below are some of the payment options for larger remodeling projects, and everything you should consider before choosing your payment method.

Cash Out Refinancing
Best for: Homeowners that have equity in their home.
Benefits: Offers tax deductible interest and a lower comparable interest rate.
Consider: Make sure you have enough home equity for this to beneficial, and consider your mortgage rate vs. the current market rate.

Credit Card
Best for: Credit cards are best for larger projects that you can commit shortly to midterm cash to.
Benefits: Allows for fast, easy payments but it’s a great way to pay for your project at your own schedule.
Consider: Transaction fees (approximately 3%), interest rates, and your revolving debt.

Construction Loan
Best for: Large projects when there is not enough equity in the home to fund the project.
Benefits: Borrow against the post project appraised home value, minimizing the cash required.
Consider: Interest rates, timing, and transaction costs.

Home Equity Loan
Best for: Fast, easy payments for projects homeowners don’t want to spend short term cash on.
Benefits: Tax deductible, allows for flexible repayment, and home equity lines that are already in place do not require closing costs.
Consider: An adjustable interest rate.

For more detailed information and payment options, see Moss’ blog post here.

— Moss Building & Design


Moss Building and Design is the top home remodeling company in Northern Virginia that has established a reputation for excellence in remodeling additions, kitchens, bathrooms, and basements and providing home services for homeowners. With a strong focus on community, Moss Building and Design encourages a hands-on approach to home improvement with an emphasis on education. Their ‘Girls Night Out’ HandyMOM101 events offer DIY workshops covering projects like tiling, power drills, caulking, and patching drywall. Connect with them online, Facebook, and Twitter.


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