Not everyone finds the perfect house in the perfect condition. Many homes need at least a little work done before they're ready to be the base for all your family's dreams. But paying for those repairs and renovations adds a further challenge for budget-minded buyers.

So, where can you find the cash needed to bring your new house up to snuff? Here are four financing methods and why you may or may not want to tap them.

1. Renovation Loans

A renovation (or rehab) loan is a product that combines the mortgage needed to buy the house with the money needed to complete the repairs. The loan is approved for the mortgage amount, and you close on the house. Then, you get an estimate for the repairs. The money for those renovations is placed into an escrow account specifically for this purpose. Both FHA and Fannie Mae offer versions to suit different borrowers.

There are basically two types of renovation loans: limited and standard. Limited loans are best for cosmetic updates. They are faster to get approved, but they generally have a cap at $35,000. Standard loans are larger and more suited to major remodeling (like adding rooms, structural issues, or major updates to the kitchen). The work and spending are overseen by an approved consultant rather than the homeowner.

2. Cash Out Refinancing

If the repairs on your new house don't need to be done immediately, you have some additional options. Refinancing the mortgage is a popular method as long as interest rates stay fairly low. Refinancing involves getting a new loan, so it can be as complex as getting the original mortgage which turns off some borrowers who just went through the process.

The appeal of refinancing for renovation purposes is to get a lower interest rate or get rid of PMI payments and therefore save money overall. While you can refinance the mortgage at a lower amount representing what you've already paid off, you can also take cash out of the mortgage instead. This "cash out refinance" option provides the additional money to do some remodeling while leaving the payments spread out over the life of the mortgage.

3. Home Equity Loans

The difference between what you owe on the house and what it's worth is called your equity. You can often get a loan against this equity and use the money for a variety of purposes, including vacations, paying off other debt, financing college, and home remodeling.

Tapping home equity in order to take out a loan is a common method for paying for remodeling, and it often carries a low-interest rate. The biggest challenge for new homeowners is that there simply isn't enough equity in the house yet. If you just bought the property with a small downpayment, it hasn't had time to appreciate yet. Also, most home equity loans only let you borrow up to 85% of the value of the house, limiting its usefulness.

4. 0% Credit Cards

Financing home improvements on a credit card is normally a bad idea due to the high-interest rates and fees. But if you have good credit, especially on established cards, you may qualify for 0% rates on one or more credit cards. You may want to take advantage of what is essentially free loans. But you'll be limited to the amount of money you can qualify for on any special offers and under your credit limits.

Be certain you understand any fees involved and be sure you can and will pay off the balance before the special interest rate expires. You may end up with a lot more debt if you fail to follow its rules.

What is the best way to finance your new house's remodeling demands? It depends on what you need to be done, your budget, and what credit you can access. At  Loan Fox Inc., our financing experts can help you navigate all these options and find the one that works for your family. Call today to learn more.