Do you have plans to renovate your home this year? A renovation can be a great way to improve your home, whether you want to increase its value or make it more your style. While home renovations have many benefits, they can also be costly. For many people, home improvement loans offer a convenient way to pay for renovations without having to fund the entire cost upfront.
A home improvement loan is a loan you can use to finance home renovations and other related expenses, such as emergency repairs. For example, you can use a home improvement loan to fix foundation issues, remodel your kitchen, or build a new addition.
There are different types of home improvement loans available. Some common types include:
Personal loans. You can get a personal loan for many reasons, but people often use them for home improvements. These loans are unsecured, which means there’s no collateral. Since lenders can’t seize your home if you fail to make payments on a personal loan, they typically charge higher interest rates.
Home equity loans. A home equity loan is a secured debt. Your home equity serves as collateral, meaning that the lender can take your home if you don’t make payments. Home equity loans usually offer lower interest rates, making them a good choice for people who don’t qualify for favorable rates on personal loans. In addition, you can get a higher loan limit if you’ve built significant equity in your home.
Home equity line of credit. A home equity line of credit (HELOC) is similar to a home equity loan in that your home serves as collateral. However, it functions more like a credit card, providing access to money on an ongoing basis. HELOCs typically have lower interest rates than personal loans. Some lenders may require you to have at least 20% equity in your home to qualify for a HELOC.
When deciding how to finance your home renovations, check with your loan advisor and ask about the options they have for personal loans, home equity loans, and HELOCs. They can help compare rates and determine the best option for you.
Sources: Bankrate.com, Forbes.com
We are ready to help you find the best possible mortgage solution for your situation. Contact Sheila Siegel at Synergy Financial Group today.
