Some important questions
The first thing you will need to decide in remodeling your home and finding the right loan, is who will be doing the remodeling? Will it be you, or will you hire someone else to do the work? Deciding this will point you in the direction and amount of your loan. If you decide on doing the work yourself then the loan amount may be lower than if you decide to hire a contractor or architect. A few other questions you might want to ask yourself are:
1. Do I expect my finances to change within the next few years? You don't want to take out a loan that over exceeds your income and then not be able to repay it.
2. How long are you planning to stay in the home? If you are planning to move then you may not want to do extensive remodeling and your loan amount may be smaller than if you are gutting the entire house.
3. Do I have enough money to pay a higher mortgage? Most likely with the remodel your mortgage payment will change.
These are some really thought provoking questions as you decide on what type of loan you want, and how much you want to take out on the loan.

Comparing loan terms and lenders
As you prepare to remodel and look into what loan you want, grab a pen and paper to make a list of information for each lending institution. You want the company's name, interest rate charges; if there is a minimum payment required, closing costs, and is prepayment allowed. These are basic loan features and you will want to know everything. Don't be afraid to ask questions. To just get the basic information you can contact lending institutions by phone. Make sure you talk with all the lenders on the same day because interest rates tend to fluctuate. If you have a real estate agent you may want to give them a call. Sometimes they have access to multiple lenders and mortgage options.

Loan Options
The two most popular options when it comes to home remodeling are:
1. Home equity loans
2. Home equity line of credit
A Home equity loan can have a fixed or adjustable rate and is secured by the equity of your home. Home equity loans are for big home improvement projects where a major outlay of cash is needed. For example, if you need an architect or contractor, site preparations, or major structural modifications will be made, a home equity loan may be the best option for you. You can sometimes roll your closing costs into the loan amount borrowed which allows you to close on the loan with little or not out of pocket money. Make sure you understand the conditions for paying back the loan as the arrangement can have long term effects for your family's financial plan. The danger behind home equity loans is that if you fail to repay the balance plus interest, you can get into some credit trouble and potentially lose your home. Just make sure you do all your homework.

Home equity line of credit
These loans allow you to borrow money as you go, rather than taking it all at once. They are also much easier to apply for than the standard second mortgage. They are very similar to credit cards in that at the time of closing you are assigned a specified credit limit. You borrow the fund when you need them and are only required to pay back the amount plus interest until the end of the period. HELOC is a great way to fund an extended project that unravels in many phases.