Everything you need to know about a home improvement loan
Did you know you can access financing to increase the value of your home? Property owners who hold a significant value of equity in their home may be able to access a home improvement loan, which is designed to offer a great line of credit. These loans can help property owners raise the value of their listing for increased revenue during disposal.
What are home improvement loans?
A home improvement loan is a financing product designed to help homeowners raise the value of their homes by facilitating maintenance and upgrades. They are much more difficult than home equity loans to access, but may involve larger amounts of money and longer repayment terms. This type of loan is provided by banks and credit unions, although a number of personal loan providers may also provide the product online.
Home improvement loans will range between $5000 and $100,000 depending on the needs of the borrower. They will also feature varying interest rates, which will depend on a borrower’s creditworthiness. Borrowers with great credit may access home improvement for as low as 3%, while those with a patchy credit history could face an up to 18% rate, with some lenders setting even higher terms. The loan pay back timelines will depend on the borrowed amount, although this typically ranges between 1-7 years.
How to get the best home improvement loan
You can access this type of loan from a number of lenders. It is important to look through available options to find the best home improvement loan for your needs. Here are some of the steps you should take to access ideal terms.
Why do you need a home improvement loan? If you cannot provide a specific reason, you should consider alternative financing options. Aside from helping ensure accountability, having specific needs when applying for a home improvement loan will increase your ability to qualify. Lenders will be more likely to award applications made for specific reasons, such as the addition of a furnished basement or any other specific home upgrade project than they would a generic application.
Ask for a specific award
Do you know how much you need? Creating a budget for the home improvement loan will increase your ability to spend the loan within your expectations. It may also help increase your ability to access the loan, since your lender may carry out their valuation to determine the viability of your application. In order to get the right estimates, you should consider hiring out professional valuation for a specific home improvement contract.
Assess your credit worthiness and your equity value
Will you be able to access a loan on ideal terms? Many lenders will look into your credit score before determining your interest rates. If your score is too low, you may be unable to access the best terms. You could consider increasing your score to stand a chance of better terms on your application. Raising the equity value in your home can also be a great way to increase your viability as a loan recipient. You may be better able to access a home improvement loan if you pay off more of your mortgage.
Jason Owen is a financial writer who has been published on a myriad of sites, includingCredible, GOBankingRates, Clark, Business Insider Australia, Life Hacker, Fidelity, CBS News, and MSN Money. 15+ years of financial writing experience.