When that outdated kitchen or bathroom reaches the point of no return — but you don’t have enough in savings or don’t want to use it to pay for a renovation — it may be time to explore renovation financing.

 The key is to have a plan. Start by figuring out how much money your project will cost. “You’ll work with your contractor regarding what you want done, get provided with a quote and then head to your bank or credit union for the amount needed,” explains David Reed, an Austin, Texas, mortgage professional and the author of Mortgages 101.

With this information in hand, it’s time to choose the best financing option for you.

Option 1: HELOC

One option is a home equity line of credit or HELOC. It also is mortgage secured by the equity in your home. However, it works more like a credit card and starts with a lower interest rate.

“You’re issued a line of credit based upon the equity in your home, and you tap into it when you need it,” Reed says. “You can pay it back over time or all at once. But just like a credit card, when you pay off the line of credit you can use it over and over again.”

A HELOC will have an adjustable interest rate. Your payment may also vary depending on how much of the credit line you have used and the current interest rate. American Airlines Federal Credit Union offers fixed and variable rates.

Like a home equity loan, interest on a HELOC may also be tax-deductible. Compared to home equity loans, a HELOC off ers more fl exibility. Plus, you’ll only pay interest on the amount you have actually drawn on the credit line.

Option 2: Refinancing

Another way to finance a renovation is with cash-out refinancing. This can be an appealing option if you would benefit from refinancing anyway by getting a lower interest rate and possibly a longer repayment term.

Option 3: Savings Plan

Some renovators choose the old-fashioned approach to home upgrades — save for it. One savings option that American Airlines Credit Union offers member-owners is Dream Plan Share Certificates. These allow you to start sharing for big-ticket items without having to invest a large amount of money at one time.