Are you tired of those draining roofs or the cracks in your bedroom ceiling that keep you up at night with the fear of having the roof fall on you anytime soon? Do you find it embarrassing to invite guests to your home when there are plenty of areas in your home that need renovation, even when you try to hide them with outer decorations? Worry no more, as there’s always a way out of a problem. At a time like this, the ideal way is to explore what home renovation loans are and how you can make the most out of them compared to other loans.
When we speak of a loan, it might ring the bell of prolonged paperwork, bank problems, and eligibility stress, isn’t that right? Sure, tons of loans out there may have complicated eligibility requirements and procedures. Yet, you can always find easy loans for actual and straightforward needs. Home renovation loans can be an ideal option for you if you’re not planning to use all your savings or income to fix your home’s small yet plenty of issues. But like any other loan, certain rudiments should be followed when you’re opting for one such loan.
But don’t worry if you’re unaware of the criteria and other details about a home renovation loan, as we’re here to help you explore it in detail!
Wait! Before we continue, here’s a bonus video for you to explore renovation loans a bit further.
As the name suggests, a home renovation loan is undoubtedly a type of loan that helps you cover the expenses needed to fix every basic improvement need inside your home. This improvement involves every kind of repair except for the interior or decoration of your living space.
In other terms, this is more like an unsecured personal loan that is easy to attain as it processes without the need for any collateral. Hence, compared to other home financing offers or loans, this type of loan doesn’t need a home title before the loan process. Indeed, one of the best factors makes this loan an easily accessible option for even those who aren’t willing to put their home at risk, as it’s not a mortgage nor a reverse mortgage loan.
If it isn’t a Mortgage, then what is home renovation loan?
It’s simple! When you’re exploring home renovation loans and finding out that it doesn’t require your home title, you may find it alarming. But really, it’s not anything you can’t rely on. The process of this loan’s payback is simply handled through payment installments or equal monthly payments. How you pay back this loan safely depends on the size of the loan you are taking. But despite this size, such loans aren’t meant to expand too far. Most of the time, a home renovation loan is paid back in 3-5 years max.
Another aspect of the loan that adds more feasibility for you to pay back the loan is that the loan’s payment amount stays the same, despite the life of the loan. So you can have a five or six-year time to pay back the home renovation loan and expect it to have a stable interest rate that doesn’t keep fluctuating with the time you take to pay back the loan, allowing you to slowly cover the specific amount that is promised at the beginning of the loan is processed. In addition, there is no additional fee or penalty when paying this kind of loan.
How Can You Qualify?
Another particular aspect to consider when exploring home renovation loans is the qualifying requirements. Every loan has different requirements that help you qualify for it. Even a home renovation loan has specific but straightforward requirements. While it’s not hard to qualify for this loan, what decides the amount of loan that you qualify for is your credit history and personal ability to pay. This ability to pay is analyzed by the lender through your annual income. The better your credit history and annual income, the easier it will be for you to apply for a more significant renovation loan amount. This simple loan can be attained in between an amount of $1,000 – $50,000.
Now here comes the loophole, which is the limited amount of loans most lenders offer. As per the U.S homeowner’s renovation costs, a higher amount is needed to manage yearly renovation costs and needs. Hence, that loan might not be the one-for-all service that can handle the costs of the entire home renovation. But since being a homeowner comes with significant expenses and financial pressure, you can undoubtedly find ease and convenience in managing these yearly renovation costs using this loan – making the rising homeownership and maintenance costs less impactful on your pocket. Oh, and, not to forget, you also get to have a tad bit of your overall savings secured if that’s what you’re planning to use. So it’s not all gone!
What Makes home renovation loan a Reliable and Worthy Loan Option?
Now, if the above-mentioned details of this easy-come and easy-go loan aren’t enough to convince you why a renovation loan is far better than those pressurizing and financially draining loans out there, here are some more benefits you can gain with this loan type.
It Offers Stability
Speaking of renovation loans, you may wonder about other ways to help you arrange easy and instant finance for your next home project. For instance, one I can think of now is a credit card. A card that everyone chooses to use at the time of instant financial purchase needs limits the need to take loans for every need you encounter in life. It’s an easy solution for instantly funding most of your needs in life. But is it an ideal solution in every case, especially when you’re planning to renovate your home? I guess not! Instead, a credit card may lack the amount stability, which is the most critical demand of any homeowner to bring substantial improvements and changes in his/her living space.
At a time like this, a home renovation loan offers you fixed rates and a steady and easily payable monthly installment amount. Renovation loans also have a lower APR compared to credit cards. We just can’t forget the stable interest rates you get with a home renovation loan, making it easier and more affordable with all your monthly household expenses. If you talk about credit cards, I’m sure we all end up stressing about paying back the amount that we used with these stylish and friendly-looking cards with variable interest rates, which also as soon as each month starts coming to an end.
An Instant Cash Availability Solution
Usually, we do have enough money to invest in our home improvement expenses. And at a time like this, it’s always wiser to pay upfront with the cash you have instead of looking for ways to get other finance sources to borrow the money and save what you have. However, in most cases, even with enough money in your account or that is about to come into your account, you may not have the whole amount needed for home improvement in cash. Now you can’t pay the workers in installments, can you? So when you do have cash but not all at once, opting for a home renovation loan can instantly give you all that cash and can be an easy-to-go solution that won’t ever be hard on your budgeting plan.
Safer Than Other Home Improvement Loans
Speaking of safer than other options, the HELOC is a particular home improvement financing option that is often advertised. This “home equity line of credit” lets you enjoy a lag reline of credit, margin it flexible enough to invest in any primary or luxurious home improvement need. So it’s basically enough for you to make any exceptional improvement or change in your home as you like. Doesn’t that sound like a flexible payment plan? But before you opt for it, do consider the loopholes or risks that come along. Speaking of this specific loan, it is tied to the equity in your home. That means that defaulted payments can lead to risking your home.
Is that fancy home improvement loans amount worth it if you won’t even be able to secure your home if you cannot pay back the installments of that extensive amount you take? Another possible factor that makes such types of loans insecure is the unstable interest rate that makes your monthly payable amount differ, as per the fluctuation in the global interest rates. In contrast, learning about home renovation loans and opting for one may cause lesser money coming to you, but it doesn’t risk your home nor cause financial pressure, making it a wiser and preferable method of renovating your home. Besides, why go for luxury when you can invest less and bring peace and comfort to your home? Isn’t that what we all crave the most?
Once you understand what goes into this type of loan and how you can achieve more security, financial help, and reliability, you can move forward with applying for one.