You hate the kitchen’s layout. The bathroom cabinets give you the ick every day. Remodeling your home is one of the most rewarding investments you can make, but it’s also one of the biggest. When it’s time to right your home’s design wrongs, there's one question nearly every homeowner asks early on: How are we going to pay for our home remodel?
You’re not alone. With home prices holding steady and little new construction in South Bend and the surrounding Michiana region, remodeling remains the smartest way to add comfort, function, and long-term value to your home. But as project costs climb into the tens or even hundreds of thousands, figuring out the right way to finance your remodel can feel overwhelming.
The good news? You have more options than ever. From home equity loans and HELOCs to personal loans and even grants, there are multiple paths to fund your dream project, and Peacock & Co of South Bend and nearby Southern Michigan is here to walk you through them and help you bring your dream space to life with confidence
Why Financing Matters More Than Ever
For folks remodeling in South Bend and everywhere across the country, one of the biggest questions isn’t what you want to change, it’s how you’ll pay for it. Understanding your remodel financing options is more important than ever. Here’s why.
Remodeling Costs Are Still Climbing
The past few years have brought steady increases in material and labor costs across the construction industry, and South Bend and Michigan’s Harbor Country are no exception. With little new construction in the Michiana region, remodeling remains the smartest way to increase comfort, value, and livability. But those benefits come with a price tag that’s hard to cover with cash alone.
Why Paying in Cash Isn’t Always Best
Many homeowners assume they should wait until they’ve saved up enough to cover the full cost of a remodel. But that strategy can delay projects for years and often leads to higher total costs due to inflation and ongoing wear and tear. Financing helps you get ahead of the curve. It lets you enjoy your remodel now, while spreading the investment out over time in a manageable, predictable way.
The Cost of Doing Nothing
Waiting to renovate often costs more in the long run. That outdated kitchen might be costing you in energy bills. A too-small bathroom might impact your family’s routine (and your sanity). Worse yet, ignoring signs of structural wear could lead to costly damage.
Understanding Your Remodel Financing Toolbox
Once you decide to move forward, the next step is understanding the range of financial tools available to you. Here’s a breakdown of South Bend homeowners' most common options to fund their remodels.
Home Equity Loan for Remodel
A home equity loan is a fixed-rate loan based on the equity you’ve built in your home. It’s typically paid out in a lump sum, which makes it ideal for large-scale projects with clear scopes, like a full kitchen renovation or multi-room remodel.
This type of loan offers stable monthly payments and competitive interest rates, especially for homeowners with strong credit. Because the interest may be tax-deductible when used for major home improvements, it’s a popular choice in our area.
HELOC (Home Equity Line of Credit)
A HELOC allows you to borrow against your home’s equity, but instead of receiving the funds all at once, you draw from the line as needed, similar to a credit card. This flexibility can be helpful if your remodel is being completed in phases or you want to cover any unexpected costs that arise during construction.
HELOCs often feature variable interest rates and interest-only payment periods, which can be attractive in the short term. But be sure to plan for the repayment phase, when principal and interest will be due.
Personal Loan for Home Renovation
If you haven’t built up significant equity yet or prefer not to use your home as collateral, a personal loan could be the right fit. These unsecured loans usually come with higher interest rates but offer faster approval and funding times. They're best suited for smaller projects or when you need funds quickly. Think of it as a good option for a bathroom refresh or a smaller kitchen upgrade, not a full addition or gut renovation.
Credit Cards
While credit cards can help cover minor costs or bridge small gaps in your budget, they come with the highest interest rates of all the options listed here. We typically don’t recommend relying on credit cards for major remodels, though promotional 0% APR cards can offer some short-term benefits if you can repay the balance before the intro period ends.
Specialized and Underutilized Options
Not every remodel is funded the same way, and depending on your goals, timeline, or property, you may want to explore some less commonly discussed financing options. These tools are often overlooked but can be a great fit in the right circumstances.
Types of Construction Loans
If you’re taking on a major overhaul, such as a full gut renovation, a second-story addition, or converting a garage into livable space, a construction loan may be appropriate. These loans are designed specifically for larger building projects and can be structured in two ways.
- Construction-to-permanent loans: Funds are drawn in stages as construction progresses. Once the work is complete, the loan converts into a traditional mortgage.
- Renovation loans: These include options like FHA 203(k) and Fannie Mae’s HomeStyle loan. They’re tailored for buying and renovating at once, or for homeowners needing a bundled loan to fund both home purchase and improvements.
Construction loans generally require detailed plans, timelines, and cost breakdowns, something Peacock & Co. is well equipped to provide with our fixed-price quote model and thorough design documentation. These loans can involve more paperwork and stricter qualifications than other options, but they offer substantial flexibility for the right project.
Contractor Financing
Some remodeling companies offer in-house financing, which can be convenient but isn’t always transparent. Peacock & Co. does not offer direct financing, but we routinely coordinate with clients and their lenders to ensure that all documentation and schedules are clear and well-supported.
If you are considering contractor financing elsewhere, be cautious. Always ask for the full terms up front, including interest rates, repayment schedules, and any hidden fees.
Home Improvement Grants
Grants are rarely available for our clients, but they are worth exploring, particularly for:
- Lower-income homeowners
- Seniors completing safety modifications
- Owners of historically significant properties
While not typically available for large-scale aesthetic remodels, grants may cover certain accessibility or energy-efficiency upgrades. Check with the City of South Bend Department of Community Investment, the Indiana Housing & Community Development Authority, or local nonprofit housing organizations.
It’s important to note that grants often come with strict eligibility requirements and limited funding windows. Still, they can be a helpful addition to your funding plan if you qualify.
How Real Homeowners in South Bend Pay for Renovations
Every homeowner’s financial picture is different. But after decades of working with clients across South Bend and Harbor Country, we’ve seen a few common patterns emerge.
Combining Funding Sources
One of the most common strategies involves blending financing tools. For example:
- A homeowner might use a HELOC to cover the bulk of a kitchen remodel, then pay for appliances with cash.
- Another might combine savings and a personal loan to minimize interest without delaying the project timeline.
Should You Pay for Your Remodel in Cash?
If you have the funds, paying in cash can offer peace of mind. You’ll avoid interest and skip the approval process. But it’s not always the best financial move. Using all your savings on a remodel can limit your emergency fund or other investment opportunities. Many financially savvy homeowners use partial financing to keep their long-term plans on track.
What Lenders Are Looking For
If you’re leaning toward financing, here’s what most lenders will want to see.
- A healthy credit score (usually 680 or higher)
- A stable income and manageable debt-to-income ratio
- At least 15–20% equity in your home (for equity-based loans)
Getting prequalified early in the planning process can streamline your remodel timeline and help you make more informed design decisions from the start..
Ready to Plan Your Michiana Remodel? Let’s Talk
Financing your remodel doesn’t have to be overwhelming, and you don’t have to figure it out alone. Peacock & Co. partners with you from day one to help you understand costs, explore your options, and plan with confidence. Schedule a consultation today and take the first step toward a home that fits your life and your budget
