Learn 5 Things to Know About Home Improvement Loans

Home upgrades can be exciting, but what form of loan do you choose if you don’t have the cash to back your vision? Learn how to manage your money ahead. As a homeowner, you will have to make repairs from time to time.

Home improvement loans are useful whether you need a new roof, window, or kitchen. Whatever home improvement project you choose, it is unlikely to be inexpensive. According to Investopedia, a bathroom remodel alone can cost more than $23,000 in the United States.

To give you an idea, according to Home Advisor, the national average cost of a new roof is $7,885. While a renovation can be thrilling, don’t apply for a loan just yet. First, there are five things you should be aware of.

1. Home improvement loans are normally classified as either a home equity loan or a personal loan.

A home renovation loan provides you with the funds to acquire any supplies required for repairs or remodeling. The word “home improvement loan” does not refer to a specific product offered by lenders.

It’s simply a catch-all term for either a home equity loan or an unsecured personal loan for a project. Depending on the sort of loan you choose, different types of funding may be available, and lenders’ interest rates will vary, so it’s crucial to study the fine print of each choice to see which you qualify for and which best meets your needs.

• Home Equity Loan: You can use the equity in your home as security for this loan. You will then have a credit line to spend on repairs or renovations. According to a Transunion analysis, more than 10 million people are likely to take up a home equity line of credit between 2018 and 2022.

Obtaining this form of home repair loan is often more difficult than obtaining a personal loan. The approval process could take days or up to six weeks. It is determined by the value of your house and the amount of equity you have, as well as your financial status.

Because the longest is roughly six weeks, it’s best to start looking for a home equity loan at least a few months before you start your project so you can budget accordingly. You can inquire with your local bank about a home equity loan, or you can look into choices from companies such as Bank of America, Wells Fargo, and Discover.

• Personal Home Loan: Several banks, credit unions, and online lenders provide personal loans. Normally, a borrower with excellent credit would be considered. However, depending on your financial condition, fair to low credit ratings can still be accepted.

It is best to shop around because there are so many lenders. Your local bank may offer personal loans (most do), or you may be able to find a lender online, such as Discover. Applying for a personal loan is simple; however, start at least a month or two ahead of time because approval can take anywhere from one day to a few weeks.