Home Improvement Loans – A Convenient Way to Finance Your Project
Home improvement includes all kinds of changes, including renovations and additions, for the interior and exterior of a home. These include landscaping, painting, building a deck, or adding on to a porch. It can also involve adding electrical or plumbing work, or resurfacing a sidewalk or pavement.
For homeowners with good credit, a home improvement loan is a convenient way to finance the project, assuming you have enough equity in the home to cover the costs. The loan can be unsecured, or secured by the home. In some cases, you may have to pay closing costs or origination fees. Some loans are fixed-rate, while others have variable interest rates. If you want to pay for the project in installments, you can opt for a home equity line of credit (HELOC).
A home improvement loan is similar to a second mortgage, but it allows you to borrow against your home’s value. As long as you make timely payments, you will own your home when the loan is paid off. Typically, the amount borrowed will not exceed 85% of your home’s value, but it is possible to secure a larger loan if you are willing to pay off the loan early.
You can also choose a personal loan, which has higher interest rates but can be more flexible. Unlike a home equity loan, which is repaid over five to 30 year terms, a personal loan is repayable in full at a specified time. Generally, the minimum APR on a personal loan is 16%, but it can be as high as 24 percent.
Before you sign up for a home improvement loan, however, you should carefully evaluate the terms and conditions. If you aren’t sure about a company’s reliability, you can ask for references. Also, check the contractor’s license. While it isn’t always necessary, hiring a licensed contractor will guarantee you that you’re not getting ripped off.
In addition, it’s a good idea to get an estimate from a few contractors before you commit to one. This way, you’ll be able to compare prices and timelines to find the best deal. Make a list of the things you need done, and compare it to the estimates. Lastly, set a payment plan for your project.
If you’re planning a major home improvement, you may want to consult an architect or engineer before deciding on a specific upgrade. They should be able to recommend the best upgrade to enhance the value of your home, and they’ll be able to explain how much it will cost.
Home improvement is an exciting undertaking, but it requires caution. Make sure the work is done right, and check with your local building codes office to make sure it’s safe. Also, don’t forget to consider your finances and insurance needs.
When comparing home improvement credit cards, look for those with introductory 0% APR periods. Many offer a 12-month period of 0%, so you don’t have to worry about paying off the balance in a single month.