If you find yourself in the red while shopping the home improvement giant where everyone wears orange, you can borrow enough green to complete your remodeling job in any color you choose.

Along with all the fixings to redo your kitchen, upgrade your bath and install a new deck, Home Depot now offers a home improvement loan you can later convert to a home equity loan to get the job done.

While some real estate experts are pondering what took the warehouse giant so long to offer what appears to be a natural do-it-yourselfer's financing convenience, other says the loan generates impulsive borrowing and it could put your home on the line.

"It is probably all right for those people who have looked into home equity loans and can tell if this is a good one or not, but if you are sitting in a store and you are mortgaging your house to do something I think it is a dangerous combination," said Earl Peattie, president of Morro Bay, CA-based Mortgage News Co.

Here's the deal.

Let's say you want to upgrade your kitchen and you come up short by few thousand dollars.

If you are shopping Home Depot, you can borrow $3,000 to $30,000, on the spot, unsecured, for up to 10 years at a fixed rate ranging from 10.99 percent to 14.99 percent -- depending upon your qualifications.

Like your Home Depot credit card, the loan represents a line of credit and you can pay off the loan anytime without penalty.

Unlike the credit card, however, your minimum initial purchase must be $2,000 and any additional purchases require a $250 minimum charge. Also unlike the store's credit card, you've got six months from the approval date to use your line of credit before the loan closes. After six months you'll have a fixed monthly payment for any charges.

Once the loan closes, you can get another one or transfer your unsecured loan to a home equity loan by calling a special number to GE Capital Financial Inc.. GE has provided credit card services to Home Depot customers for the past 12 years and is also running the home improvement-home equity loan program.

Home Depot rolled out the financing program at some 100 stores in 13 states June 6, in advance of full-fledged national availability scheduled for Sept. 1, 2000.

Home Depot's loan is a loan of convenience.

"I'm surprised that this did not happen a lot sooner. When we venture out, we want to be able to do everything from one store including financing or banking if that is possible," says Grace Morioka of Commoncents Management a homeowner association management firm.

"I realize there are those who would never get a loan from Home Depot, but a far greater number would probably take advantage of this service," she added.

Convenience is paramount to time-starved, New Economy denizens who often spend more time making money than spending it.

"Time is the currency of the 2000s. For a certain segment, if they can get a loan and pick up a hammer and a tool belt at the same location, they want it," said John V. Pinto, a real estate broker in Silicon Valley.

You could, however, pay a premium for the convenience.

Retail credit is often more expensive than a general credit card or loan obtained elsewhere -- sometimes twice as much.

Also, when you use a retailer's credit card, not only could you miss out on a cheaper rate, but you are more likely not to comparison shop.

What's more, if you decide to trade in your unsecured home improvement loan for a home equity loan Home Depot's toll free number steers you to GE -- wasting both the time you sought to save and perhaps more money.

"With a regular equity line of credit (or equity loan) from the beginning, the interest is tax deductible. Interest with Home Depot during the first six months or longer -- depending upon when you call the number -- is not deductible," said Richard Calhoun, a real estate broker and owner of Creekside Realty in San Jose, CA.

"A consumer should shop for the best rate and terms. Will the consumer take the time to shop for a rate on both the consumer loan and a home equity loan? I doubt it," said Calhoun.

That's what GE and Home Depot are counting on.

Published: August 3, 2000

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.