If you’re itching for a much-needed home renovation project, but are strapped for cash, you need a home improvement loan.
There’s no better time to get a home improvement loan than today. Home equity has spiked to a total of $23.102 trillion in the 4th quarter of 2016, which is $1.535 trillion higher than it was in the 4th quarter of 2015, according to the Federal Reserve Board. Additionally, interest rates are plummeting as the housing market booms.
Maybe you thought you have enough saved for your home improvement project, but now the actual costs are exceeding your budget? A home improvement loan can help you keep your home renovation going.
Home Improvement Loan Requirements
Peer-to-peer lenders like Prosper offer home improvement loans that you can apply for online. When you apply for a home improvement loan from banks, you’ll be required to provide a comprehensive description of the nature and scope of your renovation project. You will need to prepare an estimate of project expense, covering as much detail as possible. Your application should also describe the specific steps needed to complete the construction and the corresponding cost of each stage.
Home Improvement Loan Disbursement
Prosper allows their borrowers to pay their monthly dues in two ways:
- By Check
Most of their borrowers, however, prefer the AutoPay option since it promises convenience and reliability. It avoids missed or late payments. Payments made by check, meanwhile, requires a processing fee on top of your payment amount.
Home Improvement Loan vs Home Equity Line of Credit
Home Equity Line of Credit
A home equity loan is also known as a second mortgage. Approvals are based on your equity as a homeowner and your ability to repay. Its only advantage over a home improvement loan is that you can use its proceeds on anything and not just on home renovation alone.
Home equity loans put your property at great risk because if you don’t meet your payment obligations, a foreclosure could happen. Additionally, since you borrowed against your home’s equity, its net worth is reduced. This means that you would be getting less money if you ever decide to sell your home because you’ll need to pay off two loans.
Home Improvement Loan
If your home doesn’t have sufficient equity to sustain a home equity loan, you can apply for a home improvement loan from Prosper instead. How is this better than a home equity loan? Unlike a home equity loan that reduces the value of your home, a home improvement loan boosts the value of your property.
A loan used to make much-needed repairs can help you save money since you will be preventing the damage to worsen. Besides, it can also help lower your insurance rates and make your home more comfortable to live in.
A home improvement project requires your patience and preparedness in terms of time and money. Regardless of the project’s size or complexity, a home improvement loan is a good idea and a beneficial debt to take on.