Home improvement loans as their names say, are home loans meant to finance home modifications. Doing a modification in our home can either be necessary or just because we want our homes to look better. Within modifications or improvements, we can count general repairs, adding a new room, a bathroom, or redecorating the kitchen, just to mention some examples.
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In general, home improvements are done with the idea of maintaining or increasing a property's value. This is why landscape improvements or even constructing a swimming pool may be considered eligible for a home improvement loan, depending on the lender.
What Kinds Of Home Improvement Loans Exist?
There are many different options in home improvement loans, you should evaluate first what is that you want to do and compare then the options you got from your lender.
The most common options are: First mortgage loans, home mortgage refinancing, second loans and unsecured loans.
First mortgage loans are an option if you have purchased your home with a home mortgage loan. These loans are offered by your current lender, over you existent mortgage. In general, these kinds of loan are granted for the remaining period of your actual mortgage. The money can be given directly to the contractor or you can receive the total amount against presenting to your lender the proper proofs of monthly payment extended by your contractor.
Home mortgage refinancing are as first mortgage loans, a good option if you have purchased your home over a mortgage loan. By refinancing your actual mortgage loan, you will not borrowing extra money, but through lowering your home mortgage monthly payments, these kinds of loan may help you to release money to arrange monthly payments with your contractor.
Second loans are offered if you have a good equity in your property that justifies the loan. Before accepting any loan, try to search and compare as many different options as you can.
Unsecured loans are nothing but personal loans. If you do not look carefully for your lender, these kinds of loan may be a little more expensive than secured loans but it is worth to mention them. The best point they have, is that you will not need to have equity in your property or any other collateral.
Things To Have In Mind Before Considering A Home Improvement Loan
Before starting to search for a loan, you should have decided what sort of improvement you want for your home. Is it necessary or you just want it? Both options are valid but for those improvements that are not necessary but wanted, you may have more time to plan and evaluate the construction's details. Needed improvements may be urgent sometimes, so you should be extra careful on your decisions.
Other points to consider, that may be helpful are the costs, the contractors, and the consequences the improvements will have in your property's value.
Comparing how much are you willing to pay and the real costs of the improvements may not always match, this may sound as another silly advice, but before quitting your plans, or accepting to pay more than you can afford you should look for a second, a third and as many different contractor's opinions you can.
Contractors are other thing to care about, besides you agreed with the proposed improvement's cost, you have to feel comfortable with the contractor himself or with the team leader if you chose a big company. That person is going to be in charge of your home improvements and you are going to share some time before things get done.
I have also mentioned improvement's consequences, because you can be highly benefit if you plan your home improvements carefully, so your property's value will be increased over the loan that you are applying for. Other important thing to consider is that some home improvements can be tax deductible, so do not forget to check that with your tax advisor.