A home improvement loan is a type of home loan
taken for the purpose of financing a renovation
or improvement of your primary residence. By taking
out a home improvement loan, you not only get
the new look you desire, but also significantly
raise the property value of your home. Whether
you want to repair a kitchen, or a bathroom, or
floorings and swimming pools, you can accomplish
it easily by securing a home improvement loan.
Home improvement loans can be taken for time
periods of 5 to 30 years. You can secure a loan
amount as high as 125% of the current value of
the property for which you are applying. The loan
amount is dependant upon the interest rates and
desired payback period.
Below you’ll find some of the various types
of loan and financing and home improvement loans:
-
First Mortgage: Banks offer home improvement
loans based upon your first mortgage. These types
of loans can be extended up to the remaining period
of the original mortgage.
- Second Loans: Available to those who
own a substantial amount of equity on a property
or home.
- Home Mortgage Refinancing: Payments may
be lowered or deferred by refinancing your mortgage.
With a home mortgage refinancing, you can take
the equity from your home as a lump sum of cash.
- Unsecured Loans (Personal Loans): Unsecured
or Personal Loans do not depend on the amount
of equity in your home or on the amount of borrowed
against the value of the property. In this case,
a finance company or a bank would finance the
home improvement projects.
- Home Improvement Grants: Several government
grants programs offer financial help to lower-income
families to improve or renovate their current
homes on a discount basis. HUD programs also offer
to expand home ownership facilities, and to restore
properties, partnering with State Housing Agencies
and Non Profit Organizations.
It’s important to spend time calculating
the estimated costs for improvements and renovation
before you apply for home improvement loan. Keep
a detailed list of estimates and quotes from various
contractors. You’ll need to submit all of
these related documents to the lender when applying
for your home improvement loan.
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