Home Improvement Loans 101 – Understanding the Basics
A home improvement loan offers a means of improving and enhancing your home. Whether you plan to live in the same home for many years or want to sell it in only a few years obtaining a home improvement loan can make this possible. This type of loan will not only make your house look more aesthetically pleasing but it will also add to the value of it. Think of it like this, the investment will pay for itself in terms of appearance, appeal and property value. It is a win-win situation for every homeowner.
How to Get a Home Improvement Loan
Now that you know what a home improvement loan is the next thing you will want to know is how to go about getting one. Let us look at that now.
The first option and the one that probably comes to mind first is to visit the financial institution you deal with and apply for. Before you do this you must do an assessment of the work that would need to be done and then you would need to request that amount of money. Often known as a home improvement mortgage refinance, if you do this then you would refinance your mortgage at a fixed rate. You would then pay off your mortgage and the extra money could be used to renovate your residence. In most cases the repayment schedule would be either in the range of 20 to 30 years or else would be for the term of the mortgage.
Another option is to take out a home equity loan. In this instance you would be borrowing against the equity that you already have in your home. You would then receive a lump sum of money to make improvements to your house. If you get the loan at a fixed rate then it will be easier to repay. The downside to this is that if you do not make your payments as expected then you run the risk of losing your house.
Home Improvement Loans – What to Think About
When it comes to applying for a home improvement loan there are certain pieces of information that you must be aware of:
- Your Credit Rating Matters
The first thing you need to bear in mind before you apply for a loan to improve the look of your home is that the interest rate will be dependent upon whatever your credit rating is. The better your rate the more competitive the interest rate will you be able to get. On the other hand if you have had credit problems in the past and are a credit challenged individual then the interest rate you will be charged will be higher.
- Competition for Loans
The good news is that because home improvement loans have increased in popularity the competition between financial institutions to get business from customers looking for these types of loans has led to more options for prospective borrowers. There are numerous online lending services that have joined the throng of brick and mortar banks and credit unions which makes it easier and easier for those looking for approval for a home improvement loan to receive it.
Home improvement loans are not the same as mortgages and you do not have to go to the same lender to apply for one. If you own a piece of property and you are over a specific stipulated age limit then you qualify to apply for such a loan. Visit as many different financial institutions as you like or as you feel you need to.
- Shop Around for the Loan
Shopping around can take time but it is well worth it in terms of money saved. Find out what your bank has to offer for a home improvement loan. Keeping that quote in mind go across the street or down the street to find out what another financial institution has to offer you. Get a few quotes and then compare them. To know how much the loan is going to cost you it helps to get a few quotes and then have a source of comparison.