6 Home Improvement Loan Options

The best way to find funds for improving your home is saving up for it. However, if you are planning to apply for a home improvement loan, then you have various options.

Here are different types of home improvement loans that you can choose from.

1. Personal Loan

The easiest way to find funds is to apply for a personal loan, and it doesn’t put any of your property or assets at risk either.  Since a personal loan is not a secured loan, the rate of interest is likely to be higher.

2. Traditional Home Improvement Loan

A traditional home improvement loan can be used to pay for the materials and labor required to improve your house - think kitchen remodeling, bathroom remodeling, adding a swimming pool, etc.

These are unsecured loans too, and the rate of interest will be higher than a secured loan.

3. Local Government Loans

Some local governments offer home improvement loans for homeowners. These loans are mainly intended for low income or elderly home owners. Not all governments offer this facility.

Before applying for any other loan, it is good to check with the government since government loans usually comes with better terms.

4. Home Equity Loan

A home equity loan is a popular home improvement loan since they have long repayment schedules that result in low monthly payments. The rate of interest is also low since these loans are secured by your home and the house is tax-deductible as well.

5. Peer-to-Peer Loans

A Peer-to-Peer Loan is also an unsecured loan funded by investors but in small amounts.

The interest rate for this type of loan is based on your credit score. A good credit score will get you a lower interest rate.

6. Cash-out Refinance

In the cash-out refinance loan, you can avail a new loan to replace your mortgage loan. But, you will be borrowing more than your mortgage loan amount.

For instance, if you owe $100,000 as mortgage, you will get around $156,000 to clear your mortgage loan of $100,000 and use the remaining $56,000 for improving your home.