Adding value to a home is one of the main reasons people undertake home improvement projects. A well-executed project can add functionality and improve the appearance of the home, and in some cases, home improvement can even increase equity when it is time to sell.
If you’re planning any home improvement projects, you may be considering a home improvement loan to finance them. Keep reading to learn more about home improvement loans and how to use one to add value to your home.
How do you choose a home improvement loan?
There are many different types of home improvement loans to choose from. You can search online to find loans that offer the best interest rates, terms, and conditions. Some of the best home loans have interest rates as low as 3.99 percent, no origination fees, and no prepayment penalties. Additionally, the best home loans allow you to borrow as much as $100,000, which is enough to cover most home improvement projects. The terms of the loan usually range from 12 to 72 months, so you can choose the loan that fits your budget and needs. Furthermore, the best home improvement loans have a fast approval process, so you can get the money you need to improve your home as soon as possible.
If you’re not sure where to start, you can check out the best loans for home improvement, according to Forbes. Forbes lists SoFi, LightStream, Marcus, LendingPoint, Figure, Upgrade, Universal Credit, Discover, Upstart, and Navy Federal Credit Union as some of the home loans that offer the best features and rates.
How can you use a home improvement loan to add value to your home?
There are a variety of home improvement projects that can add value to your home. For example, the kitchen and bathroom are two of the most important rooms in a home and can be major selling points. If your kitchen or bathroom is outdated or lacks features that are popular now, consider updating them. This can include installing new countertops, cabinets, or appliances. For a fresh look throughout the whole house, you might want to consider painting the interior of your home. New paint can make your home look bigger and more inviting.
To use a loan for your home improvement project, figure out how much money you need to borrow so you can select the right type of loan. You can borrow money for home improvements through a few different loan options:
- A personal loan is a loan from a bank or credit union that is unsecured. This means that the lender does not have any collateral, such as your home, to secure the loan. The interest rate on a personal loan is usually higher than the interest rate on a home equity loan or a home equity line of credit, but personal loans are easier to qualify for.
- A home equity loan uses the equity in your home as security. Equity is the difference between the current value of your home and the amount you still owe on your mortgage. The interest rate on a home equity loan is usually lower than the interest rate on a personal loan, and you can usually borrow more money with a home equity loan.
- A home equity line of credit (HELOC) lets you borrow money against the equity in your home. You can borrow as much or as little as you need, up to a certain limit. The interest rate on a HELOC is usually lower than the interest rate on a personal loan or home equity loan.
- A cash-out refinance replaces your current mortgage with a new mortgage. The new mortgage is for a larger amount than your current mortgage, and you use the extra money to pay off your current mortgage. You then use the money you borrowed for home improvements. The interest rate on a cash-out refinance is usually lower than the interest rate on a home equity loan, but you will need to qualify for a new mortgage.
Overall, home improvement can be a fun and rewarding project. Many people enjoy the challenge of improving their homes and the sense of accomplishment they feel when the project is finished. With the best home improvement loan for your needs, you can finally build the home of your dreams.