There are many different ways to borrow money for a home improvement project, but essentially your options come down to a "secured" or "unsecured" financing vehicle. These two types of loans have advantages and disadvantages.
An unsecured loan is a loan which is not "secured" against any object of value and isn't held up with any sort of collateral. Many lending institutions will give an unsecured loan for house improvements based on a person's credit score. A home improvement store credit card is essentially an unsecured loan. You often get an unsecured loan if you have a steady income. You can even get an unsecured home improvement loan if you have zero home equity.
Home improvement store credit cards are good to use for small home improvement projects that are under $1,500 because the application process is usually fairly simple. These credit cards are the most common types of unsecured loans for house improvements. You can sometimes qualify for a 0% interest rate on some cards for a few months.
If you get a loan that is "secure" then the lending institution technically owns what you're buying until you pay them back. For a home improvement loan you are typically using the equity that's built up in your home as collateral. If you don't pay back the loan then you may actually lose your home to the bank.
Secured home improvement loans often have more paperwork but they also usually offer a smaller interest rate because they are more safe for financial lenders to give out due to the collateral involved. You may even be able to deduct the home improvement loan interest amount from your income taxes!
Both secured and unsecured home improvement loans have a purpose and can really help you fix up your house if you don't have the money needed readily available. Be sure to do your homework and make sure you can actually pay back the loan on time. - 30462
An unsecured loan is a loan which is not "secured" against any object of value and isn't held up with any sort of collateral. Many lending institutions will give an unsecured loan for house improvements based on a person's credit score. A home improvement store credit card is essentially an unsecured loan. You often get an unsecured loan if you have a steady income. You can even get an unsecured home improvement loan if you have zero home equity.
Home improvement store credit cards are good to use for small home improvement projects that are under $1,500 because the application process is usually fairly simple. These credit cards are the most common types of unsecured loans for house improvements. You can sometimes qualify for a 0% interest rate on some cards for a few months.
If you get a loan that is "secure" then the lending institution technically owns what you're buying until you pay them back. For a home improvement loan you are typically using the equity that's built up in your home as collateral. If you don't pay back the loan then you may actually lose your home to the bank.
Secured home improvement loans often have more paperwork but they also usually offer a smaller interest rate because they are more safe for financial lenders to give out due to the collateral involved. You may even be able to deduct the home improvement loan interest amount from your income taxes!
Both secured and unsecured home improvement loans have a purpose and can really help you fix up your house if you don't have the money needed readily available. Be sure to do your homework and make sure you can actually pay back the loan on time. - 30462
About the Author:
Want to learn other ways to pay for your home improvements? You may qualify for a home improvement loan even if you have bad credit or no home equity.
No comments:
Post a Comment