A home going under remodeling by Brock Builders
If your house is more than 5 years old, it may be time to consider the option of remodeling and improving your house structure. While most home improvement projects are small and inexpensive, and mainly having to do with painting or installing a few things here and there, every once in a while, items such as flooring and plumbing need to be updated and this can be very costly. If you have to undertake a major home improvement project, then you may have to consider taking out a loan.
Types of home improvement loans
There is a wide range of options available for you, should you choose to take out a home improvement loan. A quick introduction to them and their pros and cons should help you make a wiser decision:
- Most homeowners prefer a personal loan as it can save thousands on interest payments. You need to be careful on this one though because the interest rates are dependent on the market. You could opt to take a secured loan or mortgage instead, which will be secured against your property. This will allow you to take out a more substantial amount for those big projects and you are assured better interest rates.
- Another approach you could take is dealer financing, where the dealer from whom you buy goods provides you with a loan. This is a bit risky though as it means you will have to pay back the principle plus a high rate of interest.
- If you were looking to pay back the money over a long period, then the home improvement mortgage refinance loan would probably work best for you. With this kind of loan, you can schedule repayment to be up to 30 years into the future and the interest is tax deductible. You should keep in mind, however, that because it is paid back over such a long period, the accumulated interest might be quite significant.
- A home equity loan is one of the smartest ways to finance your home improvement project. With this loan, you borrow against the value of your home. You have to be very responsible with this one though; defaults in repayment could mean losing your home.
- A good old ordinary consumer bank loan may be better for you if you will just be taking out a small amount.
- You could also consider a low interest fixed rate loan. It is best for homeowners with little or no equity in their property.
The process of securing the loan
Now that you know which loans are available, you need to know how to get them. Obviously before you approach anyone for a loan, you will need to know how much you are asking for. Determine the work you want done in your house and have several contractors give you an estimate of how much it will cost to complete it. Compare these costs and determine how much you will need to borrow.
Once you have this figure, gather all the necessary documents that your bank will probably ask for. These include your tax reports, verification of employment such as payment stubs and proof of other sources of supplementary income, social security benefits for instance.
Go through your credit reports (you are entitled to request for these once per year) and contact your credit agencies if you notice anything wrong. Lenders rely almost solely on your credit history in determining whether to give out loans and you need to ensure that the credit history you present to them is the correct one.
Next, you should shop around researching on lender rates and their reputation. Opt for an established financial institution. Lay out your home improvement plans to them and hear how they plan to help you finance that and their rates. Learn to trust your instincts; if a deal sounds too good to be true, then it most likely is.
Before you put your pen to the dotted line, make sure you have read all the fine print and fully understand what you are getting yourself into. If there is something you do not understand, consult your attorney. Bear in mind that it would be better for you to spend money on consultation fee than to chew off more than you can afford to!
Hi, I am Brian and I like writing about practical aspects of home remodeling activity. While you will have to arrange finances for a full fledged improvement, you will have to spend a lot less money on things like air conditioner and generator hire.