Making improvements to your home is a great way to increase its value or simply transform it into the home of your dreams. Unfortunately, these renovations aren’t cheap and can cost hundreds or even thousands of dollars.
While some might have enough in cash to cover these home improvements, others might be required to borrow money in order to get enough to cover the costs. If this is the case for you, you have a few different options at your disposal.
Without any further ado, let’s go over 3 of the best options for getting the money you need to improve and update your home.
Home Equity Line of Credit (HELOC)
One of the best options to get the money you need is a home equity line of credit (HELOC). This works similar to a credit card, as you can borrow from this line of credit up to a certain amount. Once you pay the amount you borrowed back, you can go ahead and borrow it again in the future. People are realizing just how convenient a readily available line of credit can be. Parennts are using it to assist them in funding their childs tuition payments, as a means to travel in retirement, amongst a plethora of other potential uses.
It provides a ton of flexibility as you can use it when you need it, and can simply leave it alone, if you so choose as well. Interest rates on most HELOCs are adjustable, but the interest you pay is only on the amount borrowed, not the total amount of the line. These are a great idea for long-term projects, or smaller ones that don’t cost you a ton at once.
However, the amount you can borrow and how large your line is depends on things like your income, your credit score and even the value of your home. As a result, if you want a large LOC, be sure to know the most affordable way to raise your credit score and ensure your finances are in order.
Home Equity Loan
A home equity loan is another quality option, and simply allows you to borrow against the equity you have built in the home. These are great for large projects that require a ton of funding up front. It is similar to a second mortgage, as they have a fixed interest rate that is generally quite low.
These are also popular as they often allow you to borrow up to 100% of the equity you have in your home. The terms can also be quite favorable, as they can often be anywhere from 5 to 30 years. While these are a common choice, be sure you can pay off the amount you borrow on the right schedule. If not, you could end up losing your home.
Standard Personal Loan
While these first two options are great and preferred by many, they require you to have equity in your home. If you have no equity, or only a little, a better option for you might be a standard personal loan. These are relatively easy to get, can have fixed or variable rates and you can borrow just about any amount, as long as you’re in good financial standing.
While the terms may not be as good as with equity lines or loans, these are more accessible and are a great choice in an emergency.
When it comes to getting a standard and unsecured personal loan, you have a lot of options. While you should consider the local lenders in your area, you should also consider online lenders. Borrowing online is often very simple, can be done quickly and you can often get very favorable rates, as well.
In conclusion, we hope this blog post has helped you learn a little more about the different types of home improvement loans to consider for your next renovation.