When you want to improve your home, to make some repairs, renovate, or decorate, the only thing that can stop you is if you are short on cash; this is the purpose of a home improvement loan. Not many homeowners have the confidence to attempt home improvements on their own so they need the services of tradesmen which are a costly part of the plan.
Bear in mind that home improvement loans are just for that and as such two options are available; secured loans and those that do not require equity. A loan that does not require equity allows new homeowners to apply even if they just bought their home. The maximum period for finance without any form of equity can be up to fifteen years.
However, one stipulation for a zero equity finance arrangement is that the combined income of the owners reaches a specified limit but it must not be greater than the limit imposed by the county where they live. The eligibility of the borrower, the property type and the improvements planned are all considered because this type of loan may only have minimal documentation and is relatively easy to process.
Home improvement loans which are secured against the property are just a way of releasing spare equity that the property has available. The upside to this type of secured loan is it's available at more favorable rates of interest but is not arranged as a second mortgage on the property.
Still before a secured loan can be arranged, the equity available in your home will need to be agreed upon by the lender. Although the value of your home is required, it will also take into account how much you owe both on the house and personally.
All these factors will be considered for putting a loan package together for your consideration. Normally a lender will lend to the upper limit of the house valuation but a few lenders go much further and provide loans up to 125 percent of the valuation.
Over extending your ability to pay is the quickest way for a person to lose their home when they cannot keep up the repayments. So be careful how much money you agree on a home improvement loan and wherever possible only borrow enough to carry out essential repairs.
Best Home Improvement Loan
If you're looking for the best home improvement loan for your money it can sometimes seem like an uphill climb. You may not know whether the offer that you've received is the best that you can get, or if you should try to find a better offer elsewhere... but you shouldn't let finding the loan stress you out so badly. Getting the most out of your home improvement loan is easier than you might think; you just need to keep a few things in mind to help you to get the best loan.
Equity
When searching for the best home improvement loan, equity is a major factor. If you're not exactly sure what equity is, it's the portion of your home or real estate that you actually own... the percentage of the mortgage that's been paid off. If you've paid back 10% of your mortgage, then you'll have 10% equity; if you don't have a mortgage or you've already repaid it then you'll have 100% equity in your home.
The equity that you have is important in finding the best home improvement loan, since it's the value of your home that's acting as collateral for the loan. The more equity you have, the better chance you have of getting low interest rates and a high loan amount.
Rates fluctuate
Obviously, interest rates play a key part in finding the best home improvement loan. Interest rates will fluctuate on a national level as a way to fight inflation, but they will also vary from bank to bank and finance company to finance company. This is one of the main reasons that shopping around for a loan can be so important; getting multiple loan quotes for your home improvement or repair project can mean the difference between getting the best loan with a low interest rate and paying more because you took the first offer you received.
Look for special offers
Sometimes the easiest way to get the best home improvement loan is to simply watch for loan specials that some lenders offer. It could be an anniversary or customer appreciation day, or perhaps a tactic to draw in new first-time customers; whatever the reason for the special rates, you should at least consider them.
Many specials such as this last for only a short period, such as six months, before reverting to a higher rate... but if you can make payments at a lower rate for that period of time that reduce the total amount you pay at the higher rate, it might be a good idea to give it some serious consideration.
Both Ada Denis & Katie George are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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