A home improvement loan is meant to help fund homeowners so that they can improve or maintain their home. There is a different type of ways to help fund a home improvement project that doesn’t require filling out a bunch of paperwork at a bank.
Compare your options carefully and learn the pros and cons of each financing option.
You can take out a home improvement loan to repair damage from a natural disaster, upgrade plumbing, or build an extension, just to name a few of the many projects available.
A secured home improvement loan requires collateral. In these cases, your home serves as collateral for the money you borrow. Keep in mind, the lender can foreclose your home if you don’t repay the money. That’s why it is important to consider the pros and cons of your investment. Understanding the economy and market is a must know as well.
For those looking to take out an unsecured loan, it is harder to qualify and may offer less favorable terms. For those looking to take out an unsecured loan, it is harder to qualify and may offer less favorable terms.
CHOOSING YOUR FINANCING OPTIONS DEPENDS ON:
- Type of Home Improvement project
- Timing of project
WHERE TO GET A HOME IMPROVEMENT LOAN
Less than $5,000 project? Some of the best 0% APR cards have an initial period of 15 to 21 months during which no interest will accrue on your purchases. If you can pay off the balance before the end of the introductory period, you can fund your home improvement project for free.
Home remodel or roof replacement? Things break down. For instance, roofs get damp and need to be repaired or completely replaced after so long.
For a big home improvement project getting a loan is a more complicated application process but may be worth it if it. For a secured loan you must be willing to use your home as collateral and have built up enough funds to meet the requirements.
Home equity loan, HELOC or cash-out refinance may get you a tax deduction. To qualify, the IRS states that your project must add value to your home, increase the lifespan of your home, or adapt your home for a new use.
BANKS LOOK AT YOUR:
- Credit Score
- Debt-to-Income Ratio
- Home Equity
For example, you may need a FICO(r) score of at least 660 to get approved for a mortgage loan. However, a score of 680 or higher can increase your chances and having a score above 700 can make it easier to qualify and get good terms.
Sometimes you may get approved with a low score, but if you do, you may not receive a credit limit or loan amount high enough to fund your project. Or you may find yourself with such a high interest rate that it’s not worth borrowing money unless your project is a necessity.
No matter which path you’re considering, comparing options from multiple lenders can help you find the lowest rates and best deal.
However, you may want to apply for a 0% interest home improvement loan through Service Financing Company, LLC. We use them to help fund projects for customers and they are fantastic.