Wondering how to finance your dream kitchen? Don't worry. There are plenty of ways to find the funds you need. Here are four common financing methods:

·         home equity loan

·         line of credit based on your home’s equity

·         personal savings

·         credit cards

The best rates typically are found through home equity loans and lines of credits. These are offered by banks and credit unions, as well as online lenders. While some general contractors and home improvement retailers offer financing, those rates typically are higher.

Home equity loans allow you to borrow against the equity in your house -- you are taking out a second mortgage on your house.

Many homeowners find that a home equity line of credit offers them the flexibility they need to handle a longer project. Also, the interest you pay is tax deductible.

A credit line allows you to access cash as you need it, up to the amount approved by the lender. You only pay interest on the money you withdraw. This feature is beneficial if you anticipate your project will last for several months, or if you plan to do a partial remodel, then more at a later date.

Personal Savings

Another method of financing a remodeling project is by using savings. Before taking that step, consider how much money you have set aside for emergencies and what your comfort level is with both debt and savings levels. Also consider the interest rate you are receiving for the funds versus what you will pay for any financing.

Credit Cards

Finally, there is the possibility of using your credit cards. Keep this as a last resort, however, as you’ll pay upwards of 20 percent interest. Those steep fees can add significantly to the costs of your project.

If you want to use a credit card for a short term, make a budget and try your best to pay off the amounts you borrow within a reasonable amount of time -- say,  90 days. You don’t want to repaint your living room and pay for it for another year.

Special Deals!

Another option is to use retail store credit cards with special financing rates. A "12 months same as cash" offer can be a good idea. Just make sure you read the fine print and follow the lender's payment requirements. You typically have to pay the entire balance within a certain time period and you might have to make a minimum monthly payment. Otherwise, you could be paying a high interest rate on the entire balance.

Which financing option should you choose?  Keep these variables in mind:

·         Cost of the remodel -- higher amounts usually are financed through a home equity loan or line of credit.

·         Timeframe for the job – if you anticipate the project will stretch over several months perhaps a credit line is the way to go.

·         Your personal financial picture. Good savers may feel most comfortable dipping into their bank account to pay for the project.